Banks, telcos should collaborate to fight AI fraud – PwC

Banks and telecommunications corporations should deepen their collaboration and share intelligence to fight the rising menace of synthetic intelligence-driven fraud, in line with a brand new report from Pricewaterhouse Coopers.

The skilled providers agency famous that the speedy adoption of AI is reshaping the fraud panorama within the telecommunications sector, enabling criminals to automate scams, impersonate victims via deepfake applied sciences, and scale fraudulent schemes with unprecedented pace.

The 16-page report, titled ‘AI’s Twin Position in Telecom Fraud’, famous that whereas AI helps fraudsters launch extra subtle assaults, the identical expertise may also function a robust defensive instrument for telecom operators and monetary establishments.

“AI has super potential to drive optimistic change throughout sectors, however it additionally permits fraudsters to create and disseminate scams rapidly and at scale,” PwC mentioned, warning that the increasing digital ecosystem linking telecom networks and monetary providers is creating new vulnerabilities.

Fraud has lengthy posed a big problem for telecom operators worldwide, leading to monetary losses, reputational harm, and regulatory scrutiny. Globally, telecom fraud was estimated at roughly $38.95 bn in 2023, highlighting the dimensions of the issue. In Nigeria, the sector has additionally confronted rising dangers.

In line with the Nigerian Communications Fee, residents misplaced roughly N12.5 bn to telecom-related monetary crimes between 2019 and January 2023.

PwC mentioned the rising integration between telecom networks and monetary providers, similar to cell cash platforms and digital banking, is additional complicating the fraud panorama.

“When fraud happens throughout interconnected platforms, each telecommunications and monetary providers suppliers face regulatory scrutiny and erosion of buyer belief,” the report mentioned.

The agency added that telecom operators are more and more changing into essential infrastructure for digital monetary providers, exposing them to larger danger as criminals goal the ecosystem. Regardless of these dangers, PwC mentioned telecom corporations have a singular benefit within the struggle in opposition to fraud as a result of huge quantity of community and buyer knowledge they possess.

By deploying superior AI programs, telcos can detect suspicious exercise patterns, flag uncommon name behaviour, and establish fraudulent transactions in actual time. For instance, AI-driven sample recognition can analyse massive datasets to detect irregular name durations, uncommon name frequencies, or exercise occurring at odd hours, indicators that will sign fraudulent exercise. Machine studying fashions skilled on historic fraud circumstances may also assist establish delicate warning indicators that conventional detection programs may miss.

PwC famous that some telecom operators are already deploying AI-powered spam detection instruments able to analysing lots of of behavioural parameters to find out whether or not a message is fraudulent. Actual-time knowledge evaluation, the agency added, can permit corporations to dam fraudulent actions earlier than they trigger main monetary harm.

Past fraud detection, AI may also assist organisations reply extra successfully to incidents. Utilizing pure language processing, generative AI programs can convert technical safety knowledge into simplified experiences tailor-made for regulators, executives, and compliance officers.

Nevertheless, PwC mentioned expertise alone is not going to be sufficient to curb the rising menace. The agency confused that stronger collaboration between telecom operators, monetary establishments, and regulators is important to stop fraud from spreading throughout digital platforms. Telecom corporations, it mentioned, possess subtle instruments able to monitoring name patterns and community behaviour, which might assist banks detect suspicious actions similar to SIM swap makes an attempt.

On the identical time, banks have developed superior fraud detection algorithms that would improve telecom operators’ potential to establish suspicious exercise throughout their networks. “By sharing insights and real-time menace intelligence, each sectors can strengthen their particular person and collective defences,” PwC mentioned.

The agency cited worldwide examples the place such collaboration has improved fraud detection and response instances, together with initiatives in the UK, Singapore, Australia, and the Philippines. PwC additionally emphasised the significance of nearer engagement with regulators such because the Central Bank of Nigeria and the Nigerian Communications Fee to make sure clear and responsive regulatory frameworks that assist innovation whereas defending shoppers.