Long gone are the days of going into a branch for our
everyday banking needs, with everything from online banking and buy now, pay
later (BNPL) services to cashless and contactless payments soaring in
popularity. Last year alone, 93% of customers used one or more digital payment
methods and BNPL services accounted for $100 billion in purchases.
This surge in online banking may make customers’ lives more
convenient. However, it also opens them up to more opportunities to be
defrauded.
Major world events combined with the advancement of scamming
techniques have shifted the idea of the typical ‘vulnerable customer’. Scammers
now have a much broader range of targets, identifying new victims and
exploiting different demographics’ weaknesses.
When fraud occurs, it’s one thing to cover a customer’s
financial costs, but once consumer trust is broken and they feel that their
data is not sufficiently protected, reputational damage can be nearly
impossible to mend. Adding yet more layers of security online and to
applications can have the unintended consequence of undermining experience and
cause users to turn to other providers.
Financial institutions, both established and new, are
looking to new methods to protect those vulnerable to attacks, with solutions
like behavioural biometrics poised to play a major role in building digital
trust and safety.
Cybercriminals are around every digital corner
The way that online criminals operate is continuously
evolving. Although the rollout of two-factor authentication is a significant
step for online banking on a global scale, scammers are starting to infiltrate
and undermine these security efforts and are finding more devious ways to reach
their targets.
Fraud methods vary depending on the intended victim. For
instance, social engineering scams, where victims are emotionally and
psychologically manipulated to obtain money or confidential information, have
evolved to understand human inclinations and tendencies. Our research shows
these schemes have increased by 57% in 2021 with an average loss of $1,029 per
victim, targeting consumers at the exact right moment when they are most
vulnerable with the tempt of romance or friendship.
The threats do not stop here, with scammers moving to a
multi-layer hybrid model to defraud unsuspecting victims. Often using a mix of
smishing or SMS phishing, voice scams, and remote access scams, fraudsters
reach thousands of victims in minutes, use bots to intercept one-time passcodes
from the victim’s device and slip past bank security controls.
The evolution of the ‘vulnerable customer’
In the current economic landscape, cybercriminals are taking
advantage of vulnerable and traditionally non-vulnerable individuals. This is
driven by four factors – health, life events, resilience, and capability. All
factors can shift suddenly and dramatically, and never in our lifetime has this
been so apparent as during the pandemic.
Elderly customers remain a primary demographic for fraud,
scammed out of an estimated $3 billion a year thanks to their better credit
scores, plentiful funds, trusting nature, and lack of tech know-how. Methods
most prevalent in this age group include romance scams, imposter scams, and
lottery and sweepstake scams, with 40% of identity theft fraud victims being
over 60.
However, Gen Z have become a new target for financial
crimes, primarily through social media. Younger customers who value convenience
over privacy are increasingly falling prey to so-called ‘mule herders’ that
slide into their direct messages, recruiting them into laundering schemes with
the lure of quick and easy cash.
This method can be very challenging to detect since the
scammer does not interact directly with the banking platform and instead
convinces the user to perform an action. Mobile malware is also a key feature
in Gen Z fraud, with multi-factor authentication intercepted by scammers, hijacking
their operating system through fake apps.
All customers need protection
Customers want convenience, and financial providers should
be able to provide the security they need. If you keep putting the onus on the
customer to jump through hoops, they’re going to move to a provider that takes
the burden of security out of their hands.
Thanks to the dynamic nature of cybercrime, managing fraud
risk is a considerable and ever-evolving challenge. As scammers have got
smarter, authentication methods have remained stagnant, leaving customers
vulnerable to attack. To provide robust protection, financial institutions must
recognise the vulnerability of one-time passcodes and knowledge-based
authentication and look for solutions that go beyond the device, IP, and network-based
attitudes. They must look to user behaviour to catch criminals before they
strike.
Behavioural biometrics technology seeks out scammers through
how they interact with online platforms, while ensuring that customers still
have the frictionless banking experience they desire. Working passively in the
background of a user web or mobile session, this technology monitors thousands
of parameters such as pressure used when typing, how online forms are
navigated, and whether multiple fields are copied and pasted.
For instance, in practice, behavioural biometrics can look
for anomalies in digital interactions to reduce the risk of account takeover
and identify ‘mule personas’ on social media to seek out potential mule
herders. It can also detect potential social engineering scams, looking at
typing hesitation and session length as indicators of foul play.
Scammers are constantly altering their tactics and targets.
Equipped with the technology to hoodwink financial institutions and infiltrate
two-step authentication, it has become clear that new solutions are needed to
protect vulnerable customers.
Whether it’s elderly victims of social engineering scams, or
Gen Z falling prey to mule herders in their DMs, the most effective way to
catch fraudsters is to monitor and detect their behaviour online. Armed with
behavioural biometrics technology, financial institutions can protect their
customers from ever-increasing threats, delivering frictionless, yet secure,
banking.
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