Hello! Welcome to the 88th edition of The Pattern, a weekly publication where we dissect and delve into the latest rumblings from the world of technology, finance, and banking. Let’s get started. 

As the year nears its end, I’ve had multiple conversations with people in the industry about ‘predictions’ for FinTech in 2024. And a common theme that’s come through in all those conversations is that the coming year will see the increasing use of Artificial Intelligence (AI) in financial services, especially to combat fraud.

A race with no finish line

The truth is, fighting fraud is a race – between the technologies used to tackle fraudulent practices and the methods used by those complicit. Both evolve together almost as co-dependent organisms, trying to one-up the other.

Take this recent case for example – a woman fell victim to an AI-generated ‘voice fraud’ call, where a scammer, posing as her Canada-based nephew, duped her of a whopping INR 1.4L.

In another instance, a 54-year-old Mumbaikar received repeated calls from an individual claiming to be from her network provider. She was asked to provide some documentation immediately, failing which her SIM would be blocked.

She did as she was told, and in less than 72 hours, her bank account had been emptied, and her credit card maxed out.

The first case is particularly sinister, as the scammers employed an AI-based ‘deep fake’ voice to impersonate that of a family member – unheard of up until even a few years ago. What’s more, these deep fakes extend to images and videos as well.

The scariest part? How easy it is. All it takes is for a fraudster to download a sample of an audio clip from a potential victim’s social media or voice notes, and then employ AI voice-synthesizing tools to create the content they need. That’s all it takes to scam someone out of their life savings.

One could argue that this is the unfortunate dark side of the rising popularity of digital transactions and online banking in India. The rapid speed at which financial technology has evolved in the country has unfortunately left law enforcement agencies scrambling to catch up.

As the central government scurries to get cyber fraud under control , local authorities are working on bringing these increasingly ultra-modern scams under control. The Uttarakhand police, for example, is developing strategies that involve procuring softwares to tackle such frauds and probe them.

The question is though, how sustainable is this race? And what happens if the fraudsters get ahead? This constant game of catch-up will have winners and losers at every stage – but that’s a game that the common man can’t risk playing.\

The way forward is simple – it is financial literacy and awareness. The only way to get ahead of the technology-first wave of fraud is to know all the possibilities. While there’s a level of individual responsibility involved, it’s the country’s public agencies that need to take charge and ensure that the average Indian – who now has financial transactions at his fingertips – is aware of the pitfalls of this digital, fast-paced financial system. With great power comes great responsibility, after all.

I’d love to hear your thoughts on this. That’s all from me for this week – as always, leaving you with some interesting reads and numbers to mull over:

Reading list:

How BankConnect enables fast and thorough user verification for online trading platforms

Acing the high-tech, low-cost ops model: Small Finance Banks and the power of an agile Business Rules Engine

Empower your lending strategy with DeviceConnect: Your ultimate ally in fraud prevention

India fights back against soaring digital fraud

Between the digits

• 53,000: The number of cyber crime cases registered in 2021, of which over 60% were frauds

• 123,000: The number of employees public and private sector banks hired in the last fiscal year

• 4 hours: The potential delay window for UPI transactions above INR 2,000

Thank you for reading. If you liked this edition, forward it to your friends, peers, and colleagues. You can also connect with me on Twitter here and follow FinBox on LinkedIn to never miss any updates.  

Cheers,

Mayank

All opinions expressed are my own and do not necessarily reflect the views of FinBox or its promoters.