Major threat to South Africa’s biggest banks

South Africa’s banks are facing a growing threat from AI-driven deepfake and social-engineering scams, which, despite a reduction in overall financial crime losses, are rapidly escalating in sophistication and volume.

Financial crime losses in South Africa’s banking sector have decreased sharply, from R3.3 billion in 2023 to R2.7 billion in 2024, due to improved prevention and detection measures.

However, experts warned that these figures may be misleading. While overall losses have declined, the nature of financial crime is changing, with AI driving a new generation of sophisticated scams.

As cybercriminals probe for vulnerabilities, banks face mounting pressure to stay ahead; falling behind could mean larger financial losses, reputational damage, and eroded customer trust.

“Cybercriminals are using AI to create fake videos, audio clips, and images that impersonate bank staff, executives, or even family members,” said ESET Southern Africa cybersecurity engineer Allan Juma.

“These deepfakes are alarmingly convincing – trained on publicly available photos, videos, and voice recordings scraped from social media and other online sources.”

The result is videos that mimic facial expressions, lip movements, and speech patterns with remarkable accuracy.

The threat recently hit close to home when the South African Reserve Bank issued a public warning after a deepfake video featuring Governor Lesetja Kganyago surfaced online.

This video falsely portrayed Kganyago promoting a fraudulent investment opportunity that encouraged people to share sensitive information and approve falsified transactions.

According to the South African Banking Risk Information Centre (SABRIC), the number of digital banking fraud incidents increased from 52,000 in 2023 to nearly 98,000 in 2024.

This surge was driven primarily by social-engineering attacks that exploit human error rather than system flaws.

SABRIC warned that this trend is likely to escalate, with AI-generated deepfake audio and video scams becoming more widespread.

Banks fight back

Over the past year, deepfake-related scams in South Africa have surged by 1,200%, with the banking and fintech sectors bearing the brunt.

Juma explained that it all comes down to intent, since AI can be used to deceive or to defend, depending on who’s behind the keyboard.

“The banking and finance industry is now using the same technology that criminals exploit to generate deepfakes and phishing scams, but repurposing it to flag unusual transactions and verify identities,” he said.

“The real test, however, lies in our collective ability to adapt faster than they do. Security measures that work today may be obsolete tomorrow.”

In response, South African banks have ramped up their defences, investing in cross-industry partnerships and advanced fraud detection systems.

Capitec recently reported that its AI-enabled fraud prevention tools helped curb a surge in scams targeting clients, blocking payments to high-risk accounts and stopping over 23,000 fraudulent transactions.

This saved customers over R200 million. By deploying AI to combat the very scams that AI is helping to create, banks are taking a more proactive approach to fraud prevention.

“Effective cybersecurity depends on multiple layers of protection working in concert – and that starts with choosing a service provider that understands defence is not a single tool but a coordinated strategy,” Juma said.

“Banks need to incorporate AI-powered threat detection that flags unusual activity and adapts in real time, without disrupting legitimate transactions.”

Juma stressed that technology is only half of the solution, though. Even the most sophisticated banking systems can fail if users aren’t AI-aware.

“Educated customers are a bank’s first line of defence. When people can recognise red flags like a convincing voice clone, a suspicious investment pitch, or an unusual verification request, they don’t just protect their own accounts,” he said.

“They stop fraud before it scales, prevent breaches that compromise entire systems, and strengthen the financial ecosystem as a whole.”