With everything from online banking and buy now, pay later (BNPL) services to cashless and contactless payments increasing in popularity, the days of going into a branch for our daily banking needs are long gone. Customers utilized one or more digital payment methods in 93 percent of cases last year alone, and BNPL services were used to make $100 billion worth of purchases.
Customers’ life could become more convenient as a result of the rise in internet banking. However, it also increases their vulnerability to deception.
The concept of the usual “weak consumer” has changed as a result of significant events around the globe and the development of scamming techniques. Scammers now have a much wider variety of potential victims, finding new victims and taking advantage of the weaknesses of various groups.
Covering a customer’s cash losses in the event of fraud is one thing, but if the consumer’s faith has been lost and they believe their data is not appropriately protected, reputational damage may be nearly impossible to repair. Adding more layers of security to websites and applications may have the unintended effect of degrading the user experience and leading users to switch providers.
Financial institutions, both old and emerging, are searching for novel ways to safeguard those who are susceptible to assaults. Behavioral biometrics, for example, is positioned to play a significant role in increasing digital trust and safety.
Cybercriminals are around every digital corner
There are cybercriminals everywhere in the digital world.
The methods used by internet fraudsters are always changing. Even if the universal implementation of two-factor authentication is an important step for online banking, scammers are starting to evade and undermine these security measures and are coming up with increasingly cunning ways to approach their targets.
The intended victim determines the type of fraud used. For instance, social engineering schemes have developed to comprehend human inclinations and patterns where victims are emotionally and psychologically persuaded to get money or personal information. Our analysis reveals that in 2021, these scams surged by 57 percent, with an average loss of $1,029 per victim. They prey on consumers just when they are most vulnerable, tempting them with offers of friendship or romance.
The threats continue as con artists use a multi-layer hybrid approach to mislead gullible victims. Fraudsters frequently reach thousands of victims in minutes by combining smishing or SMS phishing, voice scams, and remote access scams. They then employ bots to intercept one-time passcodes from the victims’ devices and get past bank security measures.
The evolution of the ‘vulnerable customer’
Cybercriminals are taking advantage of both historically non-susceptible people and those who are vulnerable in the current economic climate. Four factors—health, life events, resilience, and capability—are responsible for this. Never in our experience has the ability for all circumstances to change abruptly and profoundly been more apparent than it was during the pandemic.
Customers over the age of 65 continue to be a target for fraud, with an estimated $3 billion being stolen from them each year as a result of their higher credit ratings, ample resources, trusting attitude, and lack of technological expertise. Romance scams, impostor scams, lottery, and sweepstake scams are the most common techniques used on people in this age range, with victims of identity theft fraud who are over 60 accounting for 40% of all victims.
Gen Z, however, has emerged as a fresh target for financial crimes, mostly due to social media. In their direct messages, so-called “mule herders” are increasingly preying on younger clients who value convenience over privacy by enticing them with the promise of quick and cheap money.
Since the scammer uses this technique to trick users rather than interacting with the banking platform directly, it can be very difficult to identify. Mobile malware is a crucial component of Gen Z fraud as well; con artists intercept multi-factor authentication and take control of the target’s operating system via bogus apps.
All customers need protection
Financial service providers should be able to offer the security that customers require because they demand convenience. Customers will switch to a provider who doesn’t place the burden of security on them if you keep making them jump through hoops.
Because cybercrime is dynamic, controlling fraud risk is a significant and ever-changing task. Customers are vulnerable to assault because authentication mechanisms haven’t changed as scammers have become more sophisticated. Financial institutions must acknowledge the weakness of knowledge-based authentication and one-time passcodes and search for solutions that go beyond the device, IP, and network-based approaches in order to provide comprehensive protection. To catch criminals before they commit a crime, they must examine user behavior.
The use of behavioral biometrics technology ensures that clients continue to have the seamless banking experience they want while identifying scammers through their interactions with online platforms. This system monitors thousands of characteristics, such as the amount of pressure used when typing, how online forms are utilized, and if multiple fields are copied and pasted, passively in the background of a user’s web or mobile experience.
To limit the risk of account takeover, behavioral biometrics can, for instance, in practice look for irregularities in digital interactions and detect “mule identities” on social media to find possible mule herders. It can also spot any social engineering fraud by checking for signs of foul play in the length of sessions and hesitancy in typing.
Scammers frequently change their strategies and targets. It has become obvious that new solutions are required to protect susceptible customers because hackers are equipped with the technology to trick financial institutions and circumvent two-step authentication.
The best approach to capture fraudsters is to watch and recognize their online behavior, whether it’s Gen Z falling for mule herders in their DMs or elderly victims of social engineering scams. Financial institutions may defend their clients from evolving dangers by using behavioral biometrics technology to provide seamless yet safe banking.