Digital Fraud Rate In Canada Double Of The Global Average
As the world becomes more digitized, digital fraud has also increased tremendously. However, certain nations have been struck worse than others.
Canada is one of these unlucky victim countries, where digital fraud has increased at twice the global average rate.
But it’s not all doom and gloom.
Duality Technologies, a supplier of privacy-enhanced data collaboration solutions, reported this in a research report titled ‘Inter-Bank Privacy-Enhanced Information Sharing: Fraud Detection and Prevention’ documented by financial services consultancy company Aite-Novarica.
The research examines how Canadian financial institutions might use Privacy-Enhancing Technologies (PETs) to share information to combat the fast growth in digital fraud and reverse the problem.
According to the study, such fraud-focused teamwork may save the top seven Canadian banks hundreds of millions of dollars each year, if not more than CA$1 billion per year.
Fraud has long been a problem in Canada (and worldwide). But it exploded during the pandemic as the rise of ‘faceless’ digital financial services provided the perfect cover for fraudsters.
In the first four months of 2021, the rate of suspected digital fraud attempts against Canadian financial services organizations surged by 218% compared to the same period in 2020. The predicted cost of fraud to Canadian financial services organizations in 2019 was an alarming CA$2.96 billion. This figure includes recognized fraud, implying that the total cost of fraud might be substantially higher.
Banks have been acquiring solutions to assist them in coping with escalating fraud concerns for years. That has resulted in an estimated CA$8.62 billion markets for fraud detection and prevention products by 2020. However, according to the survey, banks are now predominantly investing in internal techniques to handle a shared problem best tackled through collaboration.
The report found that sharing account and transaction data is the only method to identify and prevent fraud in an integrated banking environment, which is frequently conducted across numerous institutions using stolen identity information. This sort of data may be used to help reveal attempts to prey on consumers of several financial institutions, such as synthetic identity, bust-out, and ATO (account takeover) fraud.
The usage of information sharing solutions based on Homomorphic Encryption (HE) for privacy protection is highlighted in the research as a significant facilitator of inter-bank collaboration for fraud prevention.
Banks may encrypt data and exchange it with peer institutions for analysis and querying via HE while preserving their own and their customers’ interests and adhering to tight privacy requirements.
PIPEDA, which authorizes data exchange to defend the public interest – particularly fraud prevention – applies to Canada’s banks. Information sharing can help banks gain the upper hand in the battle against fraud by employing PETs to safeguard sensitive information and Personally Identifiable Information (PII) while reducing legal, commercial, and data privacy issues.
“Privacy-protected information sharing enables Canadian banks to move beyond inward-focused approaches and tackle the country’s skyrocketing fraud problem collectively,” said Dr. Alon Kaufman, CEO, and Co-Founder, Duality Technologies. “If banks continue with business as usual by only processing fraud-related data internally behind lock and key, they risk significant reputational and financial damage as fraud continues to grow. Adapting innovative, collaborative, fraud-fighting processes as soon as possible will immediately impact the effectiveness of their anti-fraud efforts while ensuring regulatory compliance and preserving their customers’ privacy.”