Mumbai: Phishing is on the rise. An e-mail comes to an individual’s inbox with an alert to update his bank account information. That email leads to a deceiving, phony website and helps a criminal get access to money.
Managing such virtual threats, said an executive tasked with keeping his bank’s customers safe, is the real challenge for banks.
Salem Raveendhrun, head of the risk containment unit at ICICI Bank Ltd, said that reducing and protecting against fraud at the bank is often about protecting the consumer from external, technology-enabled scams.
“My bank has a security guard standing outside,” he said. “But the biggest branch, the virtual bank, does not,” Raveendhrun said during a discussion on combating corporate fraud organized by audit firm PricewaterhouseCoopers Pvt Ltd in Mumbai.
According to him, India is seeing more identity theft, which is already rampant in the West. Banks, he added, also had to increasingly live with mortgage fraud, which is often related to false titling or valuation of property used as collateral. Raveendhrun’s message: greater dependence on technology leads to higher risk from hackers.
Participants at the discussion said that while types of fraud could vary across industries, issues related to internal fraud (or fraud by an insider at a company) were usually the same: misappropriation of funds, bribery and corruption, and falsehoods on financial reports. For companies in the services business, fraud usually revolved around employees—from lying about past experience to transferring access rights to unauthorised people, said Rostow Ravanan, chief financial officer at Mindtree Consulting.
Many industries are able to keep fraud under control, said speakers, using technology. Sumit Makhija, associate director of accounting and advisory firm PricewaterhouseCoopers Pvt Ltd’s dispute analysis and investigations group, said that fraud is all about controls. Technology, he added, could be used to identify fictitious customers.
Raveendhrun said that the most important aspect of fraud is the cost. “It should not be treated as a credit loss,” he said. There is a cost in diminishing the company’s reputation as well as potential regulatory problems.