Deepfake Fraud Losses in the Financial Industry


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Most CISOs are increasingly concerned about the potential use of deep fakes. They mislead employees and firms with fake identities, accounts, and transactions. Many cases of deep fake fraud have resulted in considerable losses to the financial industry.

Fraudsters are using Deepfake technologies and conducting various crimes in the field of payments, transactions, account creation, loans, and policies, today. They have the potential to cause significant losses with it. Banks and financial institutions need robust technologies and strategies to combat potential risks and ensure secure financial services for customers.

Here are a few ways fraudsters use Deepfakes to deceive customers with effective impersonations of identities and what banks can do to keep their customers safe.

How Deepfake Technology Allows Financial Losses

Deepfake technology is used to impersonate individuals and has caused countless financial losses due to several scams. Deepfake frauds can swindle banks and financial institutions by submitting a fake identity of an individual to conduct account opening through video conference calls.

Deepfake technology in the finance industry uses artificial intelligence (AI) software to make convincing impersonations of images, voices, and videos. Fraudsters can create the illusion of a legitimate transaction that may look similar to the real person behind the transactions.

AI is one of the technologies that easily creates these frauds, which poses a significant challenge for financial businesses and individuals. In a banking fraud case of 2020, Deepfake voice technology was used in Hong Kong’s bank heist to steal $35 million. In addition to voices, fraudsters also use emails, financial and account documents (as proof), and transactional information to convince banks of payments.

Also Read: How Machine Learning Helps Detecting FinTech Frauds

AI-generated identity fraud is on the rise. A Regula Forensic Survey The State of Identity Verification in 2023 has mentioned that 37% of organizations have experienced synthesized voice fraud, and 29% have been victims of Deepfake videos.

Deepfake technology uses artificial intelligence to combine images of an individual with video footage of another. Swapping faces is easily done through Photoshop, and creating Deepfake videos is a newer addition. Over time, the technology has improved to a level where fraudsters use a single photo and combine it with another to create a convincing video.

With usage, Deepfakes will become more effective, causing banks and financial institutions to take the hazardous effects of technology seriously. They need to monitor fraud by having robust tools and expertise. Although the technology is still developing, the number of cases is rising and becoming more effective.

Types of Threats to Financial Services from Deepfakes

New Account Fraud

New account fraud is also known as application fraud, and it occurs when fake identities are used to create bank accounts. Such cases are also identified when credentials are stolen and used in other account openings. A Deepfake application can successfully bypass regular checks efficiently and cause incidents like money laundering and scams, which are becoming common under Deepfake frauds in the financial industry.

A report, Deepfakes: The Threat To Financial Services, by Iproov, shows that 77% of financial sector CSOs are concerned about the impact of Deepfake accounts, audio, and images, and  64% CSOs believe that the Deepfake threat will get worse in the future.

Fake Identity Fraud 

Fraudulent faking of identities is the most sophisticated way of Deepfakes issues across the industry and is very difficult to detect. Instead of stealing a single identity, they combine real, fake, and stolen information of account holders and create a new identity that doesn’t exist. Such identities are used to apply for credit/debit cards or issue other transactions as new customers. Such cases are the fastest-growing type of Deepfake crimes. Banks and financial institutions need to add more layers of individual validity to mitigate Deepfakes attacks.

Undead Claims

Criminals use Deepfake technology to gather financial information about their deceased relation, such as policies, investments, and debts. Technology allows criminals to create identical images and videos showing banks and finance companies as proof of transacting money. The information gathered is represented as a live claim for transactions.

How Financial Firms Can Protect Against Deepfake Scams

Deepfakes may become a central component of criminal fraud strategies in finance. It will also become increasingly challenging to detect and prevent losses. Here are some ways for banks and other financial services organizations to prevent Deepfake fraud threats.

Assessment of Customers’ Devices is Necessary

Digital trust solutions can assess customers’ devices to check if they are trustworthy and have security alerts. Financial firms and banks should keep a check on proof that identities are confirmed by providing identity checks from the same device.

Digital trust solutions can also evaluate whether a device is under any cyber-attack or compromised by data breaches or malware. They must look at these factors closely to monitor every parameter of identity checks so that no Deepfakes are involved.

Verify Account Opening Processes with Behavioral Biometrics

Account opening in banks always remains highly vulnerable, especially since the onset of digital banking. Banks can onboard risky individuals if a fraudster uses a convincing Deepfake during the identity proof. Banks today need a robust digital trust strategy, which is possible by implementing behavioral biometrics.

Behavioral biometrics can help perform different analyses to determine whether the virtual information of customers is real or fake and if the applicant’s image matches the person using the communication device. Biometrics can be installed into bots to detect devices, networks, locations, and other parameters. Behavioral biometrics analyzes the multiple fingerprint pressures on the device screen to understand and detect the customer’s identity. The insights can help determine whether a fraudster uses a fake or synthetic identity.

Also Read: How Fintech is Revolutionizing the Future of Financial Services

Keep ID Verification Providers in the Loop

With the rise of Deepfake cases in the financial industry, banks and other financial firms can’t detect the possibilities alone. Today, there is a need for a big team that includes security experts, IT experts, and ID verification experts. Digital authentication and onboarding of online customers require ID verification. Banks may collaborate with ID verification experts to continuously check digital identities using tools and technology to avoid Deepfake instances. ID verification providers also test whether a Deepfake is used when verifying a customer’s identity. There are different parameters they use in identifying between real and fake customers. ID providers should also perform malware and device hygiene checks to ensure that a device used for account opening is trustworthy.

The threat of Deepfake in the financial industry is crucial to address and focus on its potentialities to stay aware and prepare robust solutions. Digital trust solutions offer banks to apply powerful strategies to detect fraud immediately. Banks can implement critical best practices to prevent Deepfake attacks. Apart from the ways mentioned above to avoid them, proper awareness among employees and customers is vital for firms and banks. Also, by immediate response and adopting advanced verification methods, firms can stay aware of the fraudsters and focus on delivering financial services to genuine customers.

Anushree Bhattacharya
Anushree Bhattacharya
Anushree Bhattacharya is a Senior Editor with TalkCMO, where she covers stories on B2B business strategies and digital marketing. She is a quality-oriented professional writer with eight years of experience. She has been curating content for the B2B marketing industry, and her writing style is inclined toward how businesses want to perceive information about emerging digital transformations in the marketing landscape with latest developments. Anushree blends the best information on trending digital transformations, technology-driven stories, and SEO-optimized content. Anushree is proficient in curating information-driven stories about marketing for TalkCMO publications.


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