Deepfakes Could Push Financial Fraud Losses to $40B by 2027: Deloitte

The consultancy Deloitte is flagging the intensifying risk of deepfake technology in financial services fraud. In a new report, Deloitte’s Center for Financial Services predicts that generative AI could drive fraud losses in the U.S. to $40 billion by 2027, up from $12.3 billion in 2023.

The rapid advancement and affordability of generative AI tools make it easier for fraudsters to create deepfake videos, fictitious voices, and documents, challenging the effectiveness of current anti-fraud measures, the report argues.

The financial services industry is particularly vulnerable, with incidents involving deepfakes increasing by 700 percent in fintech in 2023. Business email compromises, a common type of fraud, are expected to become even more prevalent and costly with the use of generative AI.

The report notes that banks have been at the forefront of using innovative technologies to combat fraud, but asserts that existing risk management frameworks may not be sufficient to address emerging AI threats.

To prepare for the new era of fraud prevention, banks should integrate modern technology with human expertise and collaborate with third-party providers and industry peers, the report argues. This collaboration will help develop comprehensive strategies to mitigate AI-enabled fraud. Educating customers about potential risks and maintaining transparent communication will also be crucial in building trust and preventing fraud.

Lastly, the report argues that banks should invest in training employees and hiring new talent to combat AI-assisted fraud. Despite the costs and challenges, such investments are essential to stay ahead of fraudsters. By fostering a culture of continuous learning and adaptation, banks can develop effective fraud detection software and strategies, ensuring they remain resilient against the evolving threat landscape posed by generative AI.

Source: Deloitte

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June 13, 2024 – by Cass Kennedy