Middle East banks struggling to control fraud - survey
21 December 2009 | 10433 views | 0
ReadiMinds is pleased to announce the results of its second annual Middle East online security survey titled "State of Online Security in Financial Institutions in Middle East - 2009". Survey* respondents represented a cross section of Middle East's major banks. The survey primarily focused on the issues pertaining to transaction security, online financial fraud prevention and real-time risk mitigation.
Key findings of this survey are:
1. 75% of respondents rated their own financial insitution's ability to counter online security threat as "average".
2. Internal frauds remain major source of concern in the middle east region. External frauds however are the fastest growing area of online fraud.
3. Almost all respondents reported that their financial institutions were victims of online fraud(s) during the year.
4. Increasing concerns raised about the inconveninence of hardware tokens. New "Software 2FA" technology namely device finger-printing is increasingly attracting attention [similar to Asia, India and other parts of the world], due to its effectiveness, convenience and lower cost.
5. ME financial institutions are still taking "piecemeal/fraud-wise/channel-wise" approach to tackling online frauds, as opposed to taking holistic financial crime surveillance approach across channels. However, 50% of respondents showed strong desire to implement enterprise wide holistic cross-channel financial fraud prevention moving forward.
6. Over 70% of respondents preferred "real-time" fraud detection & prevention as opposed to traditional "cooling/review period" based approach.
7. Over 75% respondents claimed to have known that an integrated multi-layered security consisting of stronger user authentication, cross-channel fraud detection [& false positive reduction] and risk-based transaction authorization is the strongest form of defence against identity theft and online financial frauds - both traditional and emerging ones.
8. 70% respondents rated efforts of their financial institutions to tackle online branch banking frauds as "average".
9. Improper hiring practices, easy access to technology/systems, and staff dissatisfaction were the top three contributing factors to online branch banking frauds.
10. Unusual transactions on client accounts and authority misuse were two of the biggest branch banking fraud concern by 50% of the respondents. .
11. Traditional audit process is still the primary mechanism being used to detect online branch banking frauds.
12. 60% of respondents felt a Real-Time Enterprise Risk Monitoring & Mitigation System, being part of a regulatory and compliance framework, could have helped minimize risk crisis in the financial industry.
13. Over 50% of respondents would like to implement real-time operational risk monitoring & mitigation framework.
14. Over 60% of respondents rated their organization's readiness to tackle trading desk related frauds as "average".
15. Online financial fraud prevention, real-time risk visibility and regulatory compliance are the top most "security and risk" agendas during the year.
16. There is an increasing desire to take a holistic approach to transaction security, that of preventing financial crime across channels across the enterprise.
17. FIs starting to think about the future challenges as well: After implementing "point" solutions that could only tackle limited security challenges for a single channel like identity theft, financial institutions are now realising they actually need a future-safe investment-proof fraud prevention solution that could grow to meet challenges posed by emerging online frauds across channels.
ReadiMinds CEO Naren Nagpal added:
"We have seen marked improvement in awareness of challenges posed by online threats - some of it is probably the result of couple of high-profile regional fraud cases widely reported in the media during the year. It seems the region mostly uses basic channel-wise transaction security primarily targeted for identity theft, as opposed to prevent broader online frauds. It is obvious there exists an excellent opportunity to leap frog and adopt real-time, integrated, multi-layered, cross-channel Financial Fraud Prevention as opposed to doing a catch-up with traditional piecemeal fraud/channel-wise approaches - afterall online fraud is borderless!".