Our phones have become a window to the world. Be it online shopping, entertainment, social media, online classes, recharges, bill payments or banking, a digital banking solution is a go-to spot for the customers. Most of the tasks are now possible on just a 5-inch screen. This phenomenon however has led to the rise of phishing scams that involve hijacking mobile banking platform user’s financial data embedded during online financial transactions. Such incidences put the credibility and reputation of the service provider at stake.

The year 2018 recorded 14.4 million victims of identity theft fraud. It has been predicted that by year 2022, only 17% of the total global transactions will be made in cash. Currently, with the social distancing norms and lockdowns in several parts of the world, more and more people are opting to transact through online banking platforms and falling in the radar of phishers. Here we will know everything about mobile wallet frauds, battling them and emerging a winner.   

Common Types of Mobile Banking Frauds

Chargebacks

A very common fraud and yet most difficult to contain. This involves the fraudster placing an order and paying for the item. Once the product arrives, the fraudster reports the transaction as fraudulent to both bank and the e-commerce company and that the product hasn’t been received. The bank in this case orders a chargeback to the e-commerce portal and the portal in turn is forced to refund the amount.  

Credit Card Fraud

Commonly understood, credit card frauds are a commonplace since internet and e-commerce have become a norm. The fraudsters have a field day by storing user’s credit card data and then use it to make unauthorized purchases through the said card.   

Mobile Device Fraud

Mobile device fraud involves unauthorized use or manipulation of a mobile device usually while the mobile device is being upgraded or changed. The scamsters can port the number remotely in this process and get unauthorized access of the device. According to a report by Guardian Analytics, 72% of the mobile banking fraud is executed via Remote Deposit Capture (RDC). RDC is a method that allows remote scanning of checks and transmits the check images for deposit to a bank through an encrypted broadband connection.

Data Theft

Financial Institutions have a large amount of customer information that is normally used to create personalized programs and offerings for the customers. This information usually comprises of personal details such as name, address, contact details, and payment information. However, if this data is siphoned by fraudsters, it not only lands the customer in a mess but maligns the reputation of the service provider.  

How to Overcome

• Banks are turning to Artificial Intelligence (AI) which promises to transform segmentation into a powerful Anti-Money laundering (AML) process that delivers considerable improvements with full transparency for model review.
• Another promising solution is blockchain. Blockchain has the capability of being immutable, permissioned and distributed. Blockchain banking can enable banks to process payments more quickly and more accurately while reducing transaction processing costs.
• Solutions that use AI or machine learning algorithms can analyze vast repositories of data and spot patterns that help in solving the problem of workplace fraud by pinpointing all dodgy-looking expenses.
• Network tokenization can safeguard the card number by replacing it with a unique string of numbers or tokens. The customer’s card number will be substituted by a different token for every merchant. This information does not transmit during transaction, making the entire payment more secure. Tokenization protects both businesses and customers from any kind of data theft and fraud. Even if hackers somehow manage to get into the system and steal tokenized data, they cannot use the stolen tokens to pay online.

What makes a Secured Mobile Wallet Solution?

Multi-factor Authentication

One password can be the access gateway to simply requiring the submission of a single password before granting access to your customer’s bank account is a defense system which can be beaten. By adding a multi-factor authentication feature – such as generated one-time passwords or fingerprints – you add an additional layer of defense which cannot easily be deceived.

End-to-end Encryption

We all know that encrypted data is safe data. Any consumer data that can only be decoded at its location is safe. End-to-end encryption ensures security audits and penetration tests are conducted upgrading the security a notch higher.

NFC embedded SIM card

This secured card allows mobile money users to securely download their credit card information into the NFC SIM card. This can safeguard customer’s account information avoiding the need to swipe it or carry it. The technology reduces the risk of credit card information compromise through the mobile bank application.

Biometrics

Safety has been the crux of a successful digital payment ecosystem and biometrics ensure customer data is stored in a secured manner. The various applications of a smart biometric process involve capturing maximum and exclusive data points from a customer. This data minimizes possible identity theft making sure customer has a secured payment experience. A multi-layer authentication similarly ensues confidence in customer over the quality of service while keeping fraudsters at bay. While onboarding, all 4 modalities of Face, Palm, Fingers and Retina can be captured and while authentication of transaction, any of the modalities can be used to verify the same.

SSL Encryption

An internet banking solution can be turned into a trustworthy secured ecosystem through SSL encryption that ensues the website is safe for use by customers.

These specific anti-fraud instruments and their implementation differentially affects customer satisfaction, trust, and commitment. The banks and FIs must make sure the solution they offer is fraud resistant safeguarded through advanced mobile banking solutions.