South African bank customers are increasingly being targeted by fraudsters who are abandoning traditional hacking methods in favour of scams that manipulate victims into willingly transferring money.
This is according to fraud prevention company BioCatch, which says banks are facing growing pressure from increasingly sophisticated scams that exploit human behaviour rather than weaknesses in banking systems.
A recent BioCatch survey found that 85% of South African banking leaders have seen an increase in fraud attempts targeting their institutions. Nearly four in five respondents (79%) said fraud-related losses are rising, while 81% estimated their organisations lose more than $5 million (approximately R82 million) to fraud each year.
The findings suggest that South African banks are experiencing greater fraud pressure than many of their international counterparts, as cybercriminals increasingly focus on deceiving customers into authorising fraudulent transactions.
Speaking to Moneyweb Radio, BioCatch Director of Global Advisory Jonathan Frost said the shift reflects the success banks have had in preventing traditional forms of unauthorised fraud.
"Banks have done such a good job at preventing unauthorised fraud that customers have unfortunately become the primary target for fraudsters," Frost said.
He explained that modern banking security systems have become so effective that criminals now rely on social engineering to persuade customers to move money on their behalf.
"The security around bank accounts is generally so strong that the only way to access the funds is to manipulate the customer into making the payment themselves," he said.
The trend has coincided with the rapid expansion of digital banking and instant payment services. While these technologies have made banking more convenient, they have also created new opportunities for criminals to pressure victims into approving fraudulent transactions.
Artificial intelligence increasing the threat
Frost warned that the threat is expected to intensify as artificial intelligence (AI) enables scammers to launch more convincing and sophisticated attacks.
"It looks like the situation will probably worsen before it gets better. We are entering a new phase of an evolving threat environment," he said.
He noted that fraudsters have long used phishing emails, fake advertisements and other social engineering tactics to deceive victims. However, AI is making these scams more believable while allowing criminals to scale their operations more efficiently.
The technology also enables scammers to overcome language barriers and quickly refine their techniques, increasing the likelihood that victims will fall for fraudulent schemes.
"It allows them to improve their attacks very quickly, making people more likely to be deceived," Frost said.
Banks urged to focus on customer behaviour
Frost believes banks need to move beyond traditional security measures such as passwords, one-time pins and trusted devices when combating fraud.
Instead, he said financial institutions should analyse customer behaviour on digital banking platforms to identify signs that users are being manipulated before payments are authorised.
"It's about understanding what the customer is doing and how they are behaving in the digital environment. That's where banks have the opportunity to identify when someone is being manipulated," he said.
He described many modern scams as a "toxic form of pre-sales", where fraudsters create a false sense of urgency to pressure victims into making rushed financial decisions.
According to Frost, anyone can become a victim under the right circumstances.
Stronger consumer protections may follow
Frost also believes South African regulators could introduce stronger consumer protection measures over the next decade, potentially requiring banks to reimburse more customers who are tricked into authorising fraudulent payments.
"I think it would be surprising if regulators in South Africa didn't begin considering additional protections for consumers over the next five to ten years," he said.
He added that increased liability would encourage banks to invest further in technologies capable of detecting manipulation before funds leave a customer's account.
Ultimately, Frost said banks and cybercriminals are now engaged in an AI-driven race, with both sides rapidly adopting new technologies.
"The real question is who moves first and who moves fastest, the criminals or those best placed to protect customers and potential victims," he said.