Digital banking fraud rises as criminals exploit technology

As South Africa embraces digital and mobile-first banking, the convenience of managing finances from a smart device has come at a steep price. The increasing sophistication of financial crimes is leaving millions vulnerable to fraudulent schemes. According to the latest data from the South African Banking Risk Information Centre (SABRIC), 65.3% of reported fraud incidents in 2024 were linked to digital banking, resulting in staggering losses of over R1.4 billion.

Bradley Elliott, CEO of anti-money laundering (AML) platform RelyComply, says phishing scams and identity fraud are among the most prevalent threats, targeting both the naïve and the financially astute. The emotional and monetary impact can be devastating; one recent victim was scammed out of R6 million by perpetrators posing as bank employees on a fraudulent app, promising lucrative trading on the Johannesburg Stock Exchange (JSE).

Elliott says in light of such occurrences, the Financial Services Conduct Authority (FSCA) issued over 100 public warnings in 2024, shedding light on the evolution of scams. Clever impersonations, deepfakes, and the rise of so-called 'finfluencers' have strained the relationship between institutions and their clients. As banks become easier targets for mimicry, trust erodes and scepticism rises among consumers.

What exacerbates the situation is the emergence of new technologies that aid fraudsters in executing complex schemes. Phishing emails often mirror legitimate communications from financial institutions, using cloned logos and slight modifications in email addresses. The urgency and fear they instil compel victims to divulge personal information, passwords, and confidential data — all designed to prey upon trust.

Elliott says a growing concern for financial institutions is the rise of digital assets used for illicit trading, particularly in the cryptocurrency space. South Africa has been notably affected, highlighted by the infamous Mirror Trading International (MTI) pyramid scheme, which defrauded investors of a staggering R8 billion.

The pivotal role of financial institutions

Addressing the rampant fraud and scams requires a collaborative approach from financial institutions, says Elliott, ranging from traditional banks to innovative fintech startups. A united front that extends beyond individual entities is necessary to tackle this evolving challenge. The sharing of intelligence and creating real-time data standards can help institutions combat these threats before they escalate.

Elliott says banks must inspire confidence through robust public education campaigns that teach consumers how to protect themselves. A troubling statistic indicates a decline in incident reporting; South Africa recorded a 65.1% rate in 2024/25. Victims often feel ashamed to come forward, and a lack of responsiveness from institutions can further diminish trust. A survey revealed that although 74% of reported scams received no follow-up actions, public transparency about fraud can encourage individuals to report incidents, knowing their concerns are treated seriously.

Protecting consumers amidst evolving threats

Customers also play a vital role in safeguarding their finances. SABRIC offers several essential tips to stay ahead of scammers:

• Be wary of unsolicited requests for confidential information; legitimate institutions will never ask for ID photos or PIN numbers.
• If you receive an urgent call, hang up and independently verify its legitimacy by contacting your bank directly.
• Investment opportunities that promise guaranteed returns should raise immediate red flags.
• Avoid downloading banking links via messaging apps or emails; always use official app stores.

Elliott says in this digital age, protecting oneself from emerging scams is a shared responsibility. Financial institutions must foster continuous innovation in anti-money laundering (AML) practices while investing in public education. This culture of accountability, where reporting fraud is encouraged and effective, is crucial for building a safe banking environment for all South Africans.

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