A comprehensive study has shed light on the methods and areas prone to digital banking fraud in India. BioCatch, a leading behavioral biometrics intelligence company, revealed that over half of all fraud cases reported by its Indian clients involve account takeovers.

The insights were disclosed in the "2024 Digital Banking Fraud Trends in India" report released on February 21. This report delves into the latest fraud patterns and suggests preventive measures for financial institutions.

The analysis, which encompassed more than 350 million sessions in December alone, provided crucial insights into emerging threats.

These findings coincide with a recent recommendation by the Reserve Bank of India (RBI) urging financial entities to move away from text-based OTPs for secure authentication.

Charanjeet S. Bhatia, an expert in counter-fraud and former Head of Group Fraud Risk and Investigations at First Abu Dhabi Bank, emphasized the inadequacy of OTP-based authentication in safeguarding against modern fraud tactics. He stressed the importance of employing advanced technologies to enhance customer protection.

Remarkably, this report marks BioCatch's first dedicated analysis focused solely on a single country.

The report identifies a concerning surge in mule accounts in India, which is not confined to the nation but extends globally. Many of these accounts have evaded detection, posing a significant challenge.

According to Tom Peacock, BioCatch's Director of Global Fraud Intelligence, the proliferation of mule accounts signifies a largely unnoticed trend within the fraud landscape. Peacock emphasized the necessity for Indian financial institutions to bolster security measures to identify and dismantle these extensive mule networks effectively.

Key Insights on India from BioCatch:

Third-party account takeover fraud constitutes 55% of all fraud cases in India, surpassing social engineering scams prevalent elsewhere.
Each device involved in mule activity in India accesses an average of 35 accounts.

Fraudsters likely operate Indian mule accounts from overseas.

While 86% of initial mule account activity originates within India, this figure drops to 20% after a month, with 16% of sessions utilizing VPNs.

Bhubaneswar records the highest mule activity among BioCatch customers in India, followed by Lucknow, Navi Mumbai, Bhagabatipur, Gobindapur, Mumbai, Bengaluru, and Cuttack.
This comprehensive report underscores the pressing need for robust security measures to combat evolving digital banking fraud in India.

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