In many countries around the world, the Covid-19 pandemic triggered widespread economic troubles. The reaction of the governments to the global financial distress led fintech firms to carry a new degree of significance.
They were instrumental in supporting the immediate digital transformation, which jumped very high on the ladder of importance as soon as the lockdowns were announced.
The Paycheck Protection Program (PPP) in the U.S, which made it a chief part of the government’s stimulus program for small businesses to keep continuing their payroll despite the use of traditional legacy systems, was also carried out with substantial help from services like PayPal.
This sharp significance garnered by fintech was seen by some cyber fraudsters as a potential target, and they began to give more attention to fintech applications such as BO Bank and Monzo. Cybercriminals, who are always on the offensive and equipped to develop and carry out millions of attacks on a single unit within a small time frame, have been targeting fintech companies through a number of methods during the pandemic.
Variety In Cyberattacks
Fifteen percent of overall loans were carried out by fintech companies in the PPP stimulus program, but the percentage of fraud cases that were played out through them is much higher than the participation itself. Seventy-five percent of the approved loans connected to fraud were handled through fintech companies.
A similar kind of fraud was also carried out in the U.K. to take advantage of the Universal Credit. Fraudsters in the UK used the large number of credit applicants as an opportunity to increase their own focus on Universal Credit scams through platforms such as Instagram and Telegram. Threat agents addressed candidates who met the Universal Credit requirements of the Department of Employment and Pensions (DWP) and registered for an expanded sum on their behalf or performed a premature transfer of funds.
Cybercriminals also used social media sites such as TikTok to endorse their illegal operations in the form of purchasing a Monzo card for cashing out funds, ordering Apple items using compromised credit card info or buying food via Deliveroo and aiming to hoodwink Paypal into reimbursing the amount.
Account takeovers and new account theft were among the most prevalent forms of fraud. Account takeovers feature fraudsters who obtain access to current accounts and make transfers as if they were the rightful owner of the account.
Criminals constructed artificial identities, called synthetic identities, which are partly based on artificial identification as well as actual information like Social Security numbers or other types of real data harvested from individuals, in order to commit new identity fraud.
What Can Be Done?
Every enterprise has been pushed to change digitally this year. Accelerated crime has gained encouragement from mandatory lockdowns and safety guidelines, which have put direct stress on contactless exchange, providing openings for scammers to experiment with new tactics and respond to a rapidly changing environment. These situations are expected to continue over the coming years as a holistic digital environment takes ground.
So what measures can be taken?
Fintech is here to stay. However, as fintech keeps expanding, organizations are searching for ways to minimize money laundering through «know your customer» (KYC) checks, detecting «unusual» transactions and flagging them up to consumers. In order to deter suspicious practices, financial networks need to keep working as fast and as flexibly as their attackers do.
Of course, fraudsters will continue to use cryptocurrency and fintech apps for the privacy and ease that they offer. A parallel development of fintech fraud is predicted with every new step that fintech takes in the forward direction. In the coming year, a range of groundbreaking multimedia contributions are set to be launched, and cybercriminals will already be anticipating the aspects in which they will be able to exploit the offerings for their fraudulent objectives. That is why risk-free, high-growth financial institutions across the globe must stay aware of the risks involved with fintech and carry on doing their best to supply their clients with safe and reliable services.
Founder and CEO of Spider Digital Innovation and a tech entrepreneur with global footprints in Cybertech, Fintech, and Social Innovation.
The original text on Forbes journal