In recent years, the banking sector in the Association of Southeast Asian Nations (ASEAN) has witnessed a significant surge in scams and fraud activities. As the digital landscape continues to evolve, fraudsters are becoming increasingly sophisticated in their methods, posing a serious threat to both financial institutions and their customers.

Recent phishing and fraudulent cases involving multiple banks in Singapore have highlighted the severity of this issue and the urgent need for banks to enhance their security measures.

Rising Fraud in Singaporean Banking Cause for ASEAN Concern

Over 200 DBS Bank customers fell victim to SMS phishing scams in the first two weeks of 2024, resulting in a total loss of S$446,000 (approximately US$328,947).

The bank’s customers also fell victim to a phishing scheme involving WhatsApp Web that ensnared more than 90 individuals in 2023, causing losses totalling S$176,000 (approx. US$129,841).

DBS isn’t the only bank making news for phishing scams. From December 2021 to January 2022, close to 800 individuals fell victim to an SMS phishing scam where fraudsters impersonated OCBC. Losses exceeded S$13 million (US$9.59 million), and the bank ultimately made the unprecedented move to compensate the entire sum as “goodwill payouts”.

Such incidents highlight the evolution of scams and fraud threats impacting the ASEAN banking sphere, and the landscape continues to grow more precarious with each tech innovation to appear, such as scams powered by artificial intelligence (AI).

Singapore Police Force data indicates that the number of scam and cybercrime cases increased by nearly half (49.6%) to 50,376 in 2023, compared with 33,669 cases the previous year.

Factors Driving the Rise of Banking Scams and Fraud in ASEAN

The rise of scams and fraud in ASEAN banking are not localised incidents, and can be attributed to several factors. Firstly, the rapid adoption of digital banking services in the past few years, accelerated by the COVID-19 pandemic, has created new opportunities for cybercriminals to exploit vulnerabilities in online platforms.

Secondly, the lack of digital literacy among some customers, particularly the elderly and those new to online banking, makes them more susceptible to falling victim to phishing attacks and social engineering tactics.

Lastly, the cross-border nature of many scams makes it challenging for law enforcement agencies to track and apprehend the perpetrators.

Strengthening Defences: Banks’ Strategies to Combat Scams and Fraud

To combat this growing threat, banks in ASEAN are implementing a range of measures to strengthen their defences against scams and fraud.

“Many financial organisations are already adopting biometric and liveness detection technologies to strengthen their fraud prevention systems,” said Frederic Ho, Vice President of APAC at Jumio.

The Jumio 2024 Online Identity Survey reveals that 85% of Singaporean consumers are willing to spend more time on identity verification measures when accessing financial services accounts to improve security.

Frederic Ho, VP, Asia Pacific, Jumio

“However, with the rise of advanced deepfake and face-swapping technologies, relying solely on biometric identity verification is no longer adequate. Malicious actors can now create highly convincing videos, images, or audio recordings with these tools.

A notable example is the recent US$25 million scam in Hong Kong, where scammers used deepfake technology to impersonate company executives in a video call. This underscores the need for more robust, multi-layered identity verification solutions that can effectively mitigate the risks of these evolving fraud tactics,”

said Frederic.

For high-risk industries like financial services, leveraging advanced biometrics and AI-driven fraud analytics can help accurately predict and prevent fraud by detecting subtle patterns across enterprise networks and anomalies that may indicate fraudulent activity, allowing banks to take swift action to mitigate potential losses.

Similar to some Malaysian banks, the three local banks in Singapore have also rolled out a self-service money lock feature for consumers to independently block their banking accounts if suspected fraud attempts were made on their funds.

Collaboration Between Industry Peers and Regulatory Bodies

Another crucial aspect of the fight against scams and fraud is collaboration between industry peers and regulatory bodies. By sharing important intelligence on emerging fraud trends, banks can stay ahead of the curve and adapt their security measures accordingly.

“A robust cybersecurity approach should include consumer education and sophisticated technology to address the complex threats posed by cybercriminals,”

said Frederic.

In Singapore, for example, the Monetary Authority of Singapore (MAS) has established the Anti-Scam Centre, which brings together banks, telecoms, and other stakeholders to coordinate efforts in combating scams.

And in the interests of raising awareness and prioritising transparency between service providers and the wider public, MAS and Infocomm Media Development Authority (IMDA) have released a consultation paper proposing a Shared Responsibility Framework (SRF).

This framework aims to distribute the responsibility for scam losses among banks, telecommunication operators, and consumers, specifically concerning unauthorised transactions resulting from phishing scams.

Under the SRF, responsible FIs are expected to fulfill specific anti-scam duties to safeguard their consumers, while telecoms must provide real-time notification alerts and respond swiftly to block suspicious numbers, or risk heavy penalties.

For their part, real-time notifications should enable consumers to report any suspicious activities immediately to their FIs, facilitating timely remedial action. This collaborative approach ensures that best practices are shared across the banking industry and that a united front is presented against the common enemy of fraud.

Benefits of Digital Identity Verification Beyond Security

The adoption of a complete and flexible identity verification platform, such as Jumio’s, is becoming increasingly important in the fight against scams and AI-driven fraud. These technologies provide financial organisations with a secure and reliable way to verify the identity of their customers, reducing the risk of identity theft and account takeovers.

Adding passive risk signals to the KYC process, such as verifying user location through IP addresses and assessing the reputation of emails and devices, provides an additional layer of protection.

The benefits of digital identity verification extend beyond just enhanced security. By streamlining the customer onboarding process and reducing the need for manual identity checks, these networks can help banks improve the customer experience and reduce operational costs.

Furthermore, by collaborating with industry peers through trusted identity networks, financial organisations can share intelligence on known fraudsters and suspicious activity, creating a more robust and resilient online ecosystem.

As the digital landscape continues to evolve, it is crucial that companies remain vigilant and proactive in their approach to security, ensuring that they stay one step ahead of the fraudsters. To learn more about Jumio platform, contact Jumio today.

Featured image credit: Edited from Freepik

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• Source: https://fintechnews.sg/95603/security/taking-the-preemptive-strike-to-thwart-rising-scams-and-fraud-in-asean-banking/