Topics In Demand
Notification
New

No notification found.

Strategies to Combat Deepfake Fraud and Synthetic Identity Threats in Financial Services
Strategies to Combat Deepfake Fraud and Synthetic Identity Threats in Financial Services

May 28, 2025

50

0

Financial institutions worldwide are facing a new generation of fraud that leverages artificial intelligence (AI) to breach identity verification systems. Deepfakes — realistic, AI-generated synthetic media — and synthetic identities — amalgams of real and fabricated data — are challenging even the most robust Know Your Customer (KYC) processes. India, with its rapidly digitizing financial landscape and expansive government-backed digital identity infrastructure (Aadhaar), is especially vulnerable to these threats.

In this article, we explore the implications of these sophisticated fraud techniques in both Indian and global contexts, and share advanced, actionable strategies that financial institutions can adopt to defend against them.

The Next Generation of Fraud Risks

In 2023, deepfake-related fraud attempts surged 700% in global fintech platforms. Meanwhile, synthetic identity fraud accounted for $2.42 billion in fraudulent losses in the U.S. alone. In India, where the digital wallet market reached USD 17.6 billion in 2024 and continues to grow at a projected CAGR of 14.2%, the expanding reliance on mobile-based onboarding and biometric verification is creating fertile ground for the misuse of synthetic identities and deepfake-driven fraud. 

India-Specific Risk Factors:

  • Aadhaar-based eKYC, while enabling scale, is increasingly targeted by impersonation fraud and Aadhaar cloning.
  • UPI fraud driven by synthetic identities and manipulated biometric inputs is on the rise.
  • Limited awareness about deepfakes among bank staff and rural customers contributes to poor incident detection rates.

Weaknesses in Current KYC Infrastructure

Traditional KYC and liveness checks, especially those relying on facial recognition, are increasingly compromised by AI-manipulated media. In India, remote onboarding has gained prominence due to cost efficiencies and government encouragement. However, the same digital convenience opens loopholes for malicious actors.

In both the global banking and financial services contexts, synthetic identities build credible credit histories using partial real data, often going undetected until large sums are defrauded. The convergence of deepfakes and synthetic data amplifies the risk, demanding a radical overhaul of detection protocols.

Advanced Strategies for Detection and Mitigation

1. Dynamic Biometric Authentication
One-time liveness detection using changing illumination or behavioral biometrics (keystroke, gaze, pulse) is significantly more resilient to deepfake impersonation.

2. AI-Powered Detection Tools
Platforms like ALFA leverage machine learning to scan for anomalies in transaction patterns, global watchlists, and user behavior. In India, such tools can supplement government frameworks like DigiLocker and Jan Dhan Yojana for fraud risk monitoring.

3. Real-Time Monitoring & Agentic AI
Indian banks using agentic AI are beginning to detect fraud by mapping behavioral anomalies across UPI, NEFT, and IMPS channels. Globally, these systems support fraud ring detection at scale.

4. Link Analysis Platforms
Particularly useful in India’s rural lending ecosystem, where fraudsters apply across multiple microfinance institutions using linked but modified identities.

5. Blockchain Forensics
With India progressing toward crypto regulation, blockchain intelligence tools are becoming essential for tracking illicit digital fund flows — helping banks comply with evolving RBI norms and global FATF guidelines.

Strategic Recommendations for Financial Institutions

  1. Build Multi-Layered, AI-Enhanced Security
     Combine behavioral biometrics, device intelligence, and dynamic authentication for layered defense.
  2. Train Staff on Emerging AI Risks
     Deploy regular simulations and microlearning (via platforms like Fluent) to help teams identify AI-generated content and fraud scenarios.
  3. Participate in Industry Intelligence Sharing
     Indian financial firms should participate in RBI’s Cyber Security and IT Examination (CSITE) framework and global institutions in FS-ISAC or similar consortiums.
  4. Conduct Focused Red-Teaming Exercises
     Target deepfake and synthetic ID vulnerabilities in regular audits — especially in high-volume onboarding channels like mobile apps and customer service bots.

Conclusion

The rise of deepfake and synthetic identity fraud marks a watershed moment in digital risk management. For global financial institutions alike, this calls for a shift from reactive security to adaptive, intelligence-driven defense. Traditional systems alone are no longer adequate.

Building resilient, multi-layered security strategies that integrate behavioral analytics, dynamic biometric verification, and real-time threat monitoring is no longer optional—it is imperative. 


That the contents of third-party articles/blogs published here on the website, and the interpretation of all information in the article/blogs such as data, maps, numbers, opinions etc. displayed in the article/blogs and views or the opinions expressed within the content are solely of the author's; and do not reflect the opinions and beliefs of NASSCOM or its affiliates in any manner. NASSCOM does not take any liability w.r.t. content in any manner and will not be liable in any manner whatsoever for any kind of liability arising out of any act, error or omission. The contents of third-party article/blogs published, are provided solely as convenience; and the presence of these articles/blogs should not, under any circumstances, be considered as an endorsement of the contents by NASSCOM in any manner; and if you chose to access these articles/blogs , you do so at your own risk.


Anaptyss is a digital solutions and business services company based in Alpharetta, GA. The organization delivers digitally enabled, value-led managed services to a diverse clientele in the financial services industry. Anaptyss co-creates innovative solutions to help clients evolve their standalone tasks and processes to fully integrated and versatile functions/CoEs, transforming their business and technology operations. Anaptyss' globally scalable managed services ecosystem, driven by the proprietary Digital Knowledge Operations™ approach, offers clients access to new-age intelligent digital technologies, deep-domain expertise, and top-tier talent.

© Copyright nasscom. All Rights Reserved.