Fewer SAs are being defrauded with digital banking – but victims lose far more

  • Digital bank fraud incidents in South Africa decreased by 18% in 2021.
  • Mobile banking has become much more secure in recent years, while banking apps are increasingly becoming a target.
  • Digital banking is “much safer than in person”, according to the South African Center for Banking Risk Information.
  • And while the number of incidents has decreased, financial losses due to digital bank fraud have jumped by 45%.
  • For more stories, go to www.BusinessInsider.co.za.

Fewer South Africans are being defrauded through digital banking platforms, but those who get scammed are losing far more than before.

According to the South African Banking Risk Information Center (Sabric), banking on digital platforms – including apps, online and mobile – outpaces all other transaction channels in South Africa. And while the total number of digital fraud incidents reported in South Africa has fallen, as revealed in Sabric’s Annual Crime Stats 2021 report released earlier this week, some platforms are less secure than others, with increasing losses.

Digital banking fraud incidents decreased by 18% overall in 2021. This decrease was attributed to much more secure mobile channels, with fraud incidents in this segment dropping by 47% from the previous year due to “enhanced detection measures implemented by banks”.

Banking apps, on the other hand, saw a 13% increase in reported fraud incidents. The average financial loss per incident also increased by 44% to R17,775, with Sabric attributing the increase “to an increase in the number of banking app users”. The reverse is true for online banking, where financial losses per incident fell by 9% to R33,781 in 2021.

“Digital banking products are much safer than in-person banking and allow people to transact securely from anywhere,” said Sabric CEO Nischal Mewalall, noting the decrease in the number total reported incidents.

“But criminals have adjusted their social engineering tactics to mine your data from social media and data leaks, making their efforts to manipulate customers hard to spot.”

Concerted attacks by cybercriminals, while fewer in number, cost victims significantly more. Gross losses from digital bank fraud in South Africa increased from R310,484,349 in 2020 to R438,238,743 in 2021, an increase of 45%.

The increase in cases of fraud through banking applications explains the increase in gross financial losses.

“While the fraudsters obtained their victims’ private information through social engineering techniques, they also exploited vulnerabilities in the handling of critical data and obtained saved usernames and passwords. across various devices or multiple apps,” Sabric noted.

Fraud affecting other banking channels has mainly increased both in the number of incidents recorded and in gross financial losses.

Pre-deposit in-branch incidents rose 56%, with financial losses in the same category jumping 85%, while ATM attacks rose 11%. Vehicle and asset finance fraud increased by 53% and card-not-present (CNP) fraud with a debit card increased by 31.5%.