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With the increase in banking on mobile phones and the internet, financial frauds in the system have also seen an uptick, says a survey on financial frauds in the financial sector by Assocham and PwC. The report said that financial frauds led to approximately $20 billion (Rs 1.26 lakh crore) in direct losses annually.
“Financial fraud is big business, contributing to an estimated $20 billion in direct losses annually. Industry experts suspect that this figure is actually much higher, as firms cannot accurately identify and measure losses due to fraud. The worst effect of financial frauds is on FDI (foreign direct investment) inflows into India,” said D S Rawat, secretary-general, Assocham.
With the rise in smartphones and younger and more digitally savvy populations, banks have been vying to get a larger share of the customer’s digital wallet. However, in this process, the banking applications by lenders are becoming increasingly vulnerable to risks such as phishing, identity theft, card skimming, etc.
“The Indian financial services sector has witnessed exponential growth in the last decade — a growth that has not been without its pitfalls, as incidents of fraud have also been on the rise. Fraud results in significant losses to the public exchequer, thus adversely affecting service delivery,” said the report.
The report states that currently, 74 per cent of the population has mobile phones and this has led to a steady rise in banking on the go. According to Reserve Bank of India data, the volume of mobile banking transactions has risen from around Rs 1,819 crore in 2011–12 to approximately Rs 1,01,851 crore in 2014-15. “Whether it’s financial transactions, customer experience, marketing of new products or channel distribution, technology has become the biggest driver of change in the financial services sector. Most financial institutions are therefore insisting on cashless and paperless transactions,” the report said.
The most common types of frauds in the banking sector as of now includes identity thefts, internet banking related frauds such as hacking and online fraud, siphoning of funds by taking the customer’s data etc.
However, banks assure that transacting via the mobile phones or on the internet is secure as all the transactions necessarily require a two-factor authentication.
“Financial fraud is big business, contributing to an estimated $20 billion in direct losses annually. Industry experts suspect that this figure is actually much higher, as firms cannot accurately identify and measure losses due to fraud. The worst effect of financial frauds is on FDI (foreign direct investment) inflows into India,” said D S Rawat, secretary-general, Assocham.
With the rise in smartphones and younger and more digitally savvy populations, banks have been vying to get a larger share of the customer’s digital wallet. However, in this process, the banking applications by lenders are becoming increasingly vulnerable to risks such as phishing, identity theft, card skimming, etc.
“The Indian financial services sector has witnessed exponential growth in the last decade — a growth that has not been without its pitfalls, as incidents of fraud have also been on the rise. Fraud results in significant losses to the public exchequer, thus adversely affecting service delivery,” said the report.
The report states that currently, 74 per cent of the population has mobile phones and this has led to a steady rise in banking on the go. According to Reserve Bank of India data, the volume of mobile banking transactions has risen from around Rs 1,819 crore in 2011–12 to approximately Rs 1,01,851 crore in 2014-15. “Whether it’s financial transactions, customer experience, marketing of new products or channel distribution, technology has become the biggest driver of change in the financial services sector. Most financial institutions are therefore insisting on cashless and paperless transactions,” the report said.
The most common types of frauds in the banking sector as of now includes identity thefts, internet banking related frauds such as hacking and online fraud, siphoning of funds by taking the customer’s data etc.
However, banks assure that transacting via the mobile phones or on the internet is secure as all the transactions necessarily require a two-factor authentication.
