Deepfake Technology Now a Major Threat: Financial Sector Faces Unprecedented Surge in Identity Fraud
Deepfake fraud up 2000%, urging urgent action for enhanced fraud prevention in financial sectors, with incidents rising by an astounding 2137% over the last three years, as highlighted in Signicat’s “The Battle Against AI-Driven Identity Fraud” report. As deepfake technology evolves, businesses across industries must reassess their security measures to counter one of the most severe threats in today’s digital world.
In a survey of over 1200 financial and payment professionals from seven European nations, including the UK, it was revealed that account takeovers are now the most prevalent type of fraud affecting their customers. This is followed by card payment fraud and phishing attacks.
The study is the first of its kind to focus specifically on AI-driven identity fraud. It underscores how deepfake technology has become a prominent form of fraud in the financial sector, utilizing artificial intelligence to craft convincingly realistic digital fabrications. As the use of deepfakes continues to rise, the urgency to enhance fraud prevention strategies has never been more critical.
Deepfake Fraud: Presentation vs. Injection Attacks
The evolving deepfake technology has enabled two main types of attacks:
- Presentation Attacks: include fraudsters wearing masks and makeup to spoof another person, but also where the camera films another screen showing a deepfake in real-time, targeting activities such as account takeovers or fraudulent loan applications.
- Injection attacks: In these cases, malware or untrusted input is deliberately inserted into a program, compromising its integrity or functionality for example as pre-recorded videos, often during onboarding or KYC processes that banks, fintech companies, or telecommunications companies are subjected to.
As these techniques become more sophisticated, traditional fraud detection systems may struggle to handle this evolving threat.
Deepfakes: A Growing Concern in Financial Fraud
According to Signicat’s report, 42.5% of fraud attempts detected in the financial sector are now due to AI. Three years ago, deepfakes were not even in the top three most common types of digital identity fraud, and today it is the most common type of digital identity fraud faced by companies. These forgeries have become more widespread and harder to identify, which has contributed to their rise as one of the main methods of identity fraud.
Delay in fraud detection tools as threats increase
Despite the increase in AI-driven fraud attempts, including deepfakes, only 22% of financial institutions have implemented AI-based fraud prevention tools. This gap leaves many companies vulnerable to more sophisticated attacks.
“Three years ago, deepfake attacks were only 0.1% of all fraud attempts we detected, but today, they represent around 6.5%, or 1 in 15 cases. This represents an increase of 2137% in the last three years, which is alarming. Fraudsters are using AI-based techniques that traditional systems can no longer fully detect. Organisations should consider advanced detection systems that combine AI, biometrics and identity verification to protect against these threats,’ says Pinar Alpay, Chief Product & Marketing Officer at Signicat. “A multiple detection setup is crucial. By combining early risk assessment, robust identity verification and authentication methods based on facial biometrics, and ongoing monitoring, companies can better protect both their operations and their customers,” she adds. “Orchestration of these tools in the optimal combination is the essence of a multi-layered protection”.
The steep rise in deepfake fraud is part of a broader trend of AI-driven identity fraud, as cybercriminals increasingly leverage advanced technologies to exploit financial systems. Signicat’s report makes an urgent call to action for financial institutions and businesses alike to proactively strengthen their cybersecurity measures.
By updating fraud detection systems, improving employee and customer awareness, and investing in AI-based fraud prevention solutions, organisations can stay ahead of these rapidly evolving threats and protect both their operations and their customers.