Rampant Digital Banking Fraud Strikes South Africa, Sabric Report Reveals

South Africans are experiencing an unprecedented wave of cyber fraud as criminals increasingly target the digital banking sector with sophisticated scams and attacks. The South African Banking Risk Information Centre (Sabric) has released alarming statistics for 2023 that show a 45% increase in digital banking fraud, leading to a 47% surge in financial losses. Despite efforts to secure financial transactions, the convenience of banking apps has inadvertently made users more vulnerable to digital fraud schemes, with these apps accounting for a staggering 60% of all digital banking crimes last year.

The boom in online transactions and the sophisticated nature of cybercriminals have led to heightened cybercrime activities, including phishing, ransomware, and complex online frauds. Sabric's report identifies generative AI as a new tool used by criminals, challenging even the most robust security measures in place.

Customers and banks alike are being urged to implement and adhere to advanced security protocols. Critical security measures such as multi-factor authentication, biometric security, and routine software updates are pivotal in combating the ever-evolving cyber threat landscape.

Card fraud remains another significant area of concern in South Africa, particularly the “Card Not Present” (CNP) fraud. Predominantly used in online transactions, CNP fraud represented 68% of the total card fraud losses and saw a nearly 19% increase from the previous year. However, counterfeit card fraud showed a notable decline of 48%, thanks to the widespread adoption of EMV chip technology and contactless payments that have reinforced transactional security.

Sabric's data also highlight a persistent issue of ATM attacks, especially in Gauteng, noting 196 incidents in 2023 involving explosives to gain access to cash machines. In contrast, there was a welcome 41% decline in robberies at state-owned banking institutions, which Sabric links to the shift from cash to card-based payments for SASSA grant recipients, reducing the cash on hand and therefore minimizing opportunities for theft.

An alarming surge in application fraud related to vehicle asset finance (VAF) and mortgage loans has also been reported. The occurrence of fraudulent applications in these areas has significantly increased, with criminal tactics involving false or stolen information used to illegitimately acquire financial services or products.

This underscores the need for a comprehensive strategy to confront financial crime. Sabric stresses that collaboration between banks, law enforcement, and regulatory bodies is imperative to effectively mitigate the risks and safeguard the financial interests of individuals and institutions alike.

In the face of escalating cyber threats to the banking sector, South Africa's Sabric report is a clarion call for heightened vigilance, enhanced security measures, and collaborative efforts to address the complex challenges posed by digital fraud and financial crime.