Financial Crime World

Banks in Indonesia Battle Escalating Fraud Threats Amid Digital Boom

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Jakarta - As Indonesia’s digital landscape expands, financial institutions are scrambling to stay ahead of sophisticated fraudsters who target unsuspecting customers. According to a recent study by GBG, a leading global technology specialist in fraud and compliance management, the rate of fraud in Indonesia shows no signs of slowing down.

The Threat is Real

The report predicts that money mule fraud typology will escalate significantly in 2020-21, posing a significant threat to banking and finance consumers. This type of scam involves fraudsters acquiring money from victims by having them open bank accounts and conduct transactions on their behalf.

Digital Channels Expose Financial Institutions to Fraud

Financial institutions in Indonesia are particularly vulnerable to fraud due to the country’s increasing reliance on digital channels. With more people turning to mobile and app banking, fraudsters are using social engineering tactics to manipulate unsuspecting customers.

  • 324 financial institutions across six Asia-Pacific countries were surveyed for the study.
  • The survey found that financial institutions in Indonesia are most vulnerable to fraud through digital channels.
  • Mobile and app banking have become increasingly popular during the COVID-19 pandemic, providing an opportunity for fraudsters to take advantage of this shift.

Fraudulent Activities on the Rise

The report highlights several types of fraudulent activities that are on the rise in Indonesia:

  • Money Mule Scheme: This type of scam is expected to rise by up to 68% in 2020-21, making it one of the most impactful scams on financial institutions.
  • Synthetic Fraud: Synthetic fraud was rated as the second most impactful scam last year and is forecasted to rise by up to 55%.
  • Stolen ID Fraud: Stolen ID fraud is also on the rise in Indonesia this year, highlighting the need for institutions to stay vigilant.

Combating Fraud

Financial institutions in Indonesia are advised to prioritize customer safety and security when using digital products. To combat these threats:

  • Financial institutions will allocate USD$88.9 million to purchase new fraud prevention technology in 2020.
  • GBG’s Digital Risk Management and Intelligence Platform offers a comprehensive solution for financial institutions to detect and prevent digital fraud.

Conclusion

As Indonesia’s digital landscape continues to evolve, it is essential that financial institutions remain proactive in preventing fraud and ensuring a safe and secure environment for customers. By investing in cutting-edge fraud prevention technology, financial institutions can increase online fraud detection accuracy by 30%, improving the customer experience while protecting vulnerable individuals from financial crime.