Coronavirus | Banking firms struggling to deal with increasing fraud incidents: Deloitte

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Coronavirus | Banking firms struggling to deal with increasing fraud incidents: Deloitte

As a result of COVID 19 and new digital operations, banking and financial institutions have been struggling to deal with an increasing number of fraud incidents and the trend is expected to continue, a Deloitte India survey said on Monday.

The increase in fraud incidents over the next two years is due to large-scale remote working models, increase in customers using non-branch banking channels and limited ineffective use of forensic analytics tools to identify potential red flags, according to Deloitte Touche Tohmatsu India LLP DTTL.

The survey also gathered the views of 70 key C-suite stakeholders, senior management who are responsible for compliance and fraud risk management, audit finance, asset recovery, and other financial institutions based in India. Private, public, foreign, co-operative and regional rural in India were included in the survey.

A 22 per cent increase in the non-retail segment saw an average of 20 fraud incidents, highlighted by 56 per cent of the survey respondents.

Over 42 per cent of respondents have reported being victims of data theft, cybercrime, third-party induced fraud, bribery and corruption, and fraudulent documentation, according to the release.

The ease and speed of transactions has been a result of the increase in the use of digital channels for transactions by customers. He said existing fraud risk management frameworks have been introduced to newer and more complex challenges because of evolving and complex business models and increased use of technology.

Nishkam Ojha, Partner, Deloitte India, said the pandemic forced significant organisational and operational changes within a short timeframe to avoid service interruptions.

With myriad changes being deployed at the front end but processes and systems possibly remaining untouched, it begets the question - have all of these changes been assessed for their vulnerability to fraud, he added.

Only half of the respondents indicated that they conduct fraud risk assessments and update their fraud risk register once a year.

With the prevalence of fraud risk assessment severely lacking, a number of loan frauds, 24 per cent mobile internet banking frauds 14 per cent identity data theft and 13 per cent identity data theft are some of the biggest concerns facing banks.

Deloitte refers to one or more Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee DTTL its network of member firms, and their related entities.