Indian banking fraud escalates as 84% of leaders report rising losses driven by AI threats

84% of Indian banking leaders report rising fraud losses, AI-driven threats emerge as major concern: Report

As artificial intelligence increasingly reshapes the financial sector, Indian banks are facing a sharp rise in fraud-related challenges, with 84 per cent of banking leaders reporting higher fraud losses over the past year, according to a survey report by BioCatch. Mumbai: As artificial intelligence increasingly reshapes the financial sector, Indian banks are facing a sharp rise in fraud-related challenges, with 84 per cent of banking leaders reporting higher fraud losses over the past year, according to a survey report by BioCatch. The survey, which covered 1,440 fraud-management, anti-money laundering (AML), and risk and compliance leaders across 25 countries, found that India has emerged as one of the most concerned and heavily impacted markets when it comes to financial fraud and AI-enabled threats. Also read: Banks, Bharti, IT: Sandip Sabharwal's top picks & why he is worried about Zepto IPO It stated "84 per cent of respondents recognize AI agents as the industry's greatest exploitable vulnerability in the next year" The survey report also mentioned that among the 100 banking and financial crime prevention leaders surveyed in India, 90 per cent said fraud attempts at their institutions have increased over the past year, significantly higher than the global average of 81 per cent. The figure marks a sharp rise from 70 per cent recorded in India in the 2025 survey. It also showed that 84 per cent of Indian banking leaders reported rising fraud losses, compared with the global average of 76 per cent. This is a substantial increase from last year's survey, when only 57 per cent of respondents in India reported increasing fraud losses. The report highlighted growing concerns around the role of artificial intelligence in financial fraud. According to the survey, 93 per cent of Indian respondents believe AI has increased the sophistication of fraud and scam schemes, while 90 per cent said it will be very challenging to distinguish between legitimate AI-assisted actions and malicious or manipulated activity in the future. Indian banking leaders also ranked among the most concerned globally about the speed of fraudulent activity. As many as 95 per cent of respondents said they are very concerned about the increasing speed of fraud, compared with the global average of 76 per cent. The survey found that fraud has a significant financial impact on institutions. About 48 per cent of Indian respondents said their institutions lose more than USD 10 million to fraud annually. Of these, 32 per cent reported losses exceeding USD 25 million, 16 per cent reported losses above USD 50 million, and 6 per cent said losses exceeded USD 100 million each year. Customer losses linked to scams and authorised fraud are also substantial. The survey showed that 58 per cent of respondents estimated their customers lose more than USD 5 million annually to scams, while 44 per cent reported losses above USD 10 million. The report also pointed to instant payment platforms as a major driver of fraud. Nearly 66 per cent of Indian banking leaders identified scam attempts through instant payment systems as the primary source of rising fraud, higher than the global average of 59 per cent. The survey noted that India's rapid adoption of UPI may be creating new opportunities for fraudsters. Also read: RBI proposes unified framework for banks' risk, compliance and audit functions Commenting on the findings, BioCatch Chief Executive Officer Gadi Mazor said, "AI is starting to reshape how customers interact with e-commerce sites and financial institutions and will change how criminals execute fraud and other financial crimes." He added that as digital interactions become faster, more automated and increasingly driven by AI agents, the industry must move beyond traditional identity checks and focus on understanding behaviour, intent and trust to effectively combat future fraud threats.

Indian Banking Fraud Surges: 84% of Executives Report Higher Losses, Up from 57%

India outpaces global peers as 90% of banking leaders report rising fraud attempts and the country ranks highest of 25 nations surveyed on concern about the speed of fraud Financial institutions around the world appear very concerned about the present and future of AI-driven fraud. In a new survey of 1,440 fraud-management, anti-money laundering (AML), and risk and compliance leaders at banks in 25 countries on five continents, 84% of respondents recognize AI agents as the industry's greatest exploitable vulnerability in the next year, 88% say AI has already increased the sophistication of fraud, 60% expect AI-mediated banking to reduce the effectiveness of traditional fraud defenses, and 72% believe it will be very difficult to distinguish between legitimate AI-assisted actions and malicious or manipulated AI activity in a future where AI agents commonly initiate transactions. "AI is starting to reshape how customers interact with e-commerce sites and financial institutions and will change how criminals execute fraud and other financial crimes," BioCatch CEO Gadi Mazor said. "As digital interactions continue to grow faster, more automated, and increasingly driven by agents, we must move beyond static identity checks and toward a deeper and immediate understanding of behavior, intent, and trust." Commissioned by BioCatch, which prevents fraud and financial crime by recognizing patterns in human behavior, the survey highlights how the global fraud challenge is manifesting across different markets -- with India emerging as one of the most concerned and heavily impacted countries. The survey interviewed 100 fraud management, financial crime prevention, and risk and compliance leaders from Indian financial institutions. Ninety percent of Indian banking leaders surveyed say they've observed an increase in fraud attempts over the past year, significantly higher than the global average of 81%. Additionally, 84% reported rising fraud losses, compared to 76% globally. Both figures also represent a significant uptick from last year's survey, in which 70% of those surveyed in India reported increasing fraud attempts and only 57% reported increasing fraud losses. All respondents were manager-level or above, 62% were director-level or above, and 31% identified as members of their bank's C-suite. Nearly all (98%) work at institutions with more than $10 million under management, 64% say their bank holds more than $100 million in assets, 49% more than $1 billion, and 22% more than $10 billion. Indian banking leaders also appear particularly convinced that AI-powered fraud -- both in the present and the future -- represents a serious threat. Among the 25 countries surveyed in 2026, India emerged as the country most concerned about the accelerating speed of fraud. Rising fraud: * 90% say fraud attempts at their institution are increasing (vs. 81% globally). In 2025, only 70% of Indian respondents reported increasing attempts. * 84% say fraud losses at their institution are increasing (vs. 76% globally). Last year, only 57% of Indian respondents reported increasing fraud losses. * 95% are very concerned about an increase in the speed of fraudulent activity (vs. 76% globally). * 48% say their institution loses more than $10 million to fraud every year, 32% more than $25 million, 16% more than $50 million, and 6% more than $100 million. * 58% say their customers lose more than $5 million to authorized fraud/scams every year, 44% more than $10 million, 19% more than $25 million, 7% more than $50 million, and 2% more than $100 million. Interbank intelligence sharing: * 94% think interbank intelligence sharing could have a significant positive impact on their ability to stop fraud and financial crime (vs. 85% globally). * 93% believe gaining real-time intelligence on the receiving account involved in a transaction would have a significant impact on their ability to recognize and stop scams (vs. 86% globally). AI impact: * 93% believe AI has increased the sophistication of fraud and scam schemes (vs. 88% globally). * 83% believe AI agents could be the industry's next largest exploitable vulnerability by fraudsters in the next year (vs. 84% globally). * 90% believe that it will be very challenging to distinguish between legitimate AI-assisted actions and malicious or manipulated activity (vs. 72% globally). Other notable takeaways: * A full two-thirds (66%) of Indian banking leaders cite scam attempts via instant payment platforms as the main driver of fraud in the country, compared to the 59% global average of respondents naming instant payments as the primary driver of increased fraud attempts in their geographies. India's rapid UPI adoption is likely creating new attack opportunities for fraudsters. * 60% of Indian banks actively measure and report customer attrition from fraud, compared to just 47% globally. This signals a mature approach to understanding the business impact of fraud on its customer base.