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Losses from digital banking fraud in South Africa are estimated to total at least a billion and a half Rand a year. In this interview with Chris Steyn, Governance, Compliance and Risk Expert Deshnee Govender, shares how the sophisticated modus operandi of bank fraudsters fool customers, and she shares tips to avoid being tricked by them. Deshnee also urges banks to have proper Governance, Compliance and Risk measures in place, and to submit employees to integrity testing and lifestyle audits. Meanwhile, she describes how the banking industry is being revolutionised. “There’s… Revolut, a totally digital bank… It’s currently operating in the UK and Europe, but it’s got its license now to… operate in South Africa. Then as from next year, the PEPCOR group…coming out with their own bank… PlusB. So there’s a lot of other players that are going to be entering the market as well. And I think the key…for the conventional banks…is to see who can actually manage the monies…of the citizens professionally and with integrity…those newcomers…are going to bring a different kind of vibe to the market. And I think citizens will be tempted to go to banks where you can be assured…that your resources are absolutely safe.”
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Edited transcript of the interview
Chris Steyn (00:01.125)
Losses from digital banking fraud in South Africa are estimated to total at least a billion and a half Rand a year. I speak to Governance, Compliance and Risk expert Deshnee Govender. Welcome Deshnee
Deshnee Govender (00:18.862)
Thank you so much, Chris, for having me on your show. And thank you to all our viewers who are listening and watching at the same time. Thank you.
Chris Steyn (00:29.233)
You’re welcome, Deshnee. Please share with our viewers the latest sophisticated methods being used by the bank fraudsters to fool them.
Deshnee Govender (00:42.062)
The latest you know methods that fraudsters are actually utilising to actually defraud people is you know, you could be working from home or you could be in the mall or so, and you’ll get this call coming through, you know. And sometimes you’ll be so fooled because it would have the very similar logo to your bank, you know, and somebody on the other side would be saying I’m from so-and-so bank and I’m just trying to alert you that your credit cards are being compromised, you know, they’re being utilized at this mall and that mall and across the country and things like that. So your immediate response would be to actually go into a frenzy, you know, into a panic situation. So you’re not even looking to see whether that logo is actually authentic, you know, it really belongs to the bank.
So the person will just then say, you know, if you are uncomfortable about believing me, if you think, you know, that this is just a scam, I can put you through to my supervisor, you know, who would be able to actually explain to you. And you’ll be flabbergasted that it’s the same kind of old music that you get in the bank. So then you realise, well, you know, maybe this is actually legitimate, you know, the bank actually has my best interests at heart and I need to actually cooperate then only to find out that they come via the banking app, you know, where you at, where you have to actually authenticate them and little do you know they have access to all your banking, you know, they can max up your credit card, they can max up your debit card, they can actually take your access bond, they could take your RCP, they could even apply for a loan in your name online and it can actually get approved, you know. So these are some of the tactics that they’re using.
And from a bank’s perspective as well you know I feel like there’s such a lack of GRC. And when I say this
Deshnee Govender (03:05.27)
I mean, you know, it it’s so important for the bank when they have a logo to make sure that that logo is properly encrypted as well. So it would be very difficult for fraudsters to actually be able to utilise those logos because you have the proper trademarks, etc., in place. And if somebody uses it without your permission, you know, it’s a violation. So actually you’re allowed to actually sue that person.
Chris Steyn (03:32.593)
Hmm. I was just going to ask you, how are they managing to bypass traditional banking security measures?
Deshnee Govender (03:44.143)
It looks like the fraudsters on the outside have enablers who are actually sitting in the bank. Because there’s no way that somebody would be able to actually access your bank account, come via the banking app for you to actually authenticate it if there’s no enablers in the bank, or unless your systems are so compromised.
Chris Steyn (04:10.392)
Mm. So are you saying that the responsibility for this is ultimately with the banks?
Deshnee Govender (04:18.926)
Absolutely. It’s the responsibility of the bank to actually ensure that the resources of citizens are actually safeguarded. And as we move into digitisation, as we move into AI, it’s actually the bank’s prerogative to actually make sure that they have proper systems in place to actually safeguard our resources.
Chris Steyn (04:45.082)
Hm. ‘Cause surely if a ninety year old man who hardly ever uses his account suddenly starts spending money wildly, the bank should be picking it up and stopping it until they can authorise or until they can confirm with him that he is actually spending the money.
Deshnee Govender (05:04.782)
Absolutely. And you know, it’s almost like 11 months since I’ve experienced, you know, bank fraud. And I started this Facebook group, Citizens Unite Against Bank Fraud. So many people have actually reached out to me. In the past three weeks, I have been helping pensioners write letters to the State President’s office, to the CEOs of banks because it’s so painful. Imagine a seventy-five-year old person who has worked all their life, has gone on pension and then within three weeks, you know, five hundred K is actually removed from their bank accounts.
Chris Steyn (05:49.435)
Hm. We’ve had complaints too from people who are saying they are …struggling to get full reimbursement from the banks because they themselves had authorised the transaction even though they were tricked into doing so.
Deshnee Govender (06:06.24)
In some cases, yes, people are receiving the OTP numbers and you know, I do feel for our parents, our grandparents, they’re not as educated as we are. And sometimes, you know, if they are prompted, they are likely to actually press, you know, that OTP number or whatever the case may be. But in many instances, people have been saying no OTP number was actually received by them.
So while the banks are actually fooling people as well that you have actually pressed an OTP number or you used an OTP number, and that’s how this transaction actually went through.
And then also when you’re alerting the bank about the bank fraud, you know, that’s actually taking place, surely they can actually contact Bank Serve. This is where the clearing and the forwarding is actually done.
In a particular case, you know, there was lots of money that were actually paid via a credit card, you know, to a merchant and the bank didn’t even know who the merchant was. And if you just do a Google search of the merchant, it pops up as a betting place, Super Bets in Limpopo.
Deshnee Govender (07:32.418)
And then the banks are not able to actually tell you, you know, where the monies actually went to as well, because they would actually be non compliant then with the POPI Act.
Chris Steyn (07:47.429)
Hm. Now from what you’ve heard from all the people who have posted on your Facebook page, what are you asking the banks to implement? What measures are you asking the banks to implement urgently?
Deshnee Govender (08:02.552)
We actually want proper GRC in the banks. You’ll find that we’re sitting as a country as well, you know, in this particular position as well, because there’s such a lack of effective GRC. GRC is actually Governance, Risk, Compliance, and all these three functions are so interrelated, they’re so interdependent, and one cannot take place without the other.
So we want banks to actually, you know, make sure that there’s proper frameworks in place, there’s proper policies in place. And we also want banks to actually ensure that when resources are actually employed in the organisation, that people are subjected to integrity testing. Integrity testing is a very specific part of psychometric testing. Yes, we want them to have psychometric testing as well because that would give you an indication what type of people you’re actually employing in the bank. It would give you an indication as to whether those people actually have high emotional intelligence, meaning that you know, Deshnee has a very high intelligence, emotional intelligence. She’s working with Chris Steyn’s bank account, and she’s sitting there with. 250 million, but you know what? today Deshnee doesn’t have food to eat, you know. And maybe she could actually dip into Chris Steyn’s account and then she could actually put it back there, you know, when she gets paid. So I mean people with high levels of emotional intelligence wouldn’t do things like this. So the psychometric testing with the integrity testing is absolutely important.
And vetting is very important as well. So it’s important, you know, to actually vet the person before they’re actually employed because you’ll find that sometimes we don’t do the…
Deshnee Govender (10:06.137)
… the vetting, you know, for the employee] that’s actually coming on board, only to find once the employee is there, when you see the employees there, you see red flags and when you suddenly do a Google search, then you’ll find out that this person has actually committed fraud, you know, in the UK or in any part of the world and has come here to South Africa. Understand? So it’s so important then for, you know vetting agencies to be actually utilised in recruitment processes.
And then once the people are employed in the bank as well, it’s so important for lifestyle audits to actually be conducted as well. Because the lifestyle audits will actually give you an indication. Yeah. As to how person A is sitting at this particular per level, but person A can actually afford to drive an Aston Martin with…
Deshnee Govender (11:04.867)
…his name actually engraved on the pedals.
Chris Steyn (11:10.012)
Well, at the moment banks are investigating the complaints themselves. Am I correct? There’s not an independent oversight body.
Deshnee Govender (11:19.297)
You’re quite correct about that. And then this is a problem as well. It’s a challenge because you have investigators in the bank. Are the investigators in a position to actually then investigate the fraud within the bank? Are they not compromised? It’s actually a conflict of interest. And remember, people are actually trying to hold on to their jobs as well. They have families to actually feed. This is their livelihood as well. So are they going to be willing to actually investigate this?
And I had both my cases of fraud reported at the bank to the police. And the police usually issue you know, a Section 205, and they actually… it’s a subpoena, you know, they subpoena the bank to actually provide the police with this kind of information. And you’ll find that in one particular instance the subpoena was issued to the bank, the bank actually sent through all my bank statements, but did not give the police an indication as to who that particular merchant was that received, you know, the two hundred and two K.
Chris Steyn (12:34.012)
Now with banking customers being increasingly forced to take accountability themselves, what tips can you give them to try and safeguard themselves from these fraudsters?
Deshnee Govender (12:47.735)
It’s absolutely essential. I was somebody that actually never looked at my bank statements for years. And I have been banking with this particular bank for the past thirty-six years. And I trusted this bank so much that my salary would come in and you know what, all my payments would actually go through, and I wouldn’t even have a glance at my bank statement.
It’s absolutely essential for people to actually look at their bank statements all the time.
If they receive calls from the bank saying that it’s very like drama related, you know somebody is utilising your bank cards here, there everywhere you need to actually tell them you know I’m sorry I would actually go to the bank and I’ll actually have this matter resolved with the bank.
And if you receive an email where you need to actually click and, you know, update your details and things like that, don’t do it. Rather go into the bank, you know, over a weekend or in the day when you have time and go into the bank and then update your details.
And yeah, clearly we could see there’s a trust deficit in the relationships that we actually have with the banks. And people need to actually make sure that they’re also responsible for their resources.
So my advice to people that are actually retiring and that are receiving their pensions, their provident funds, etc. Look for investment brokers to help you to actually invest the monies, you know, into other companies, etc., and then perhaps get a drawings, you know, every month that comes into your bank account. And never share your pins with anybody. Yeah, that’s the kind of advice I could give because I feel like if your pension…it’s a huge amount, it’s sitting in your bank account, it’s going to attract the evil eye.
Chris Steyn (15:08.508)
What about banking fraud globally? It’s obviously not just happening in South Africa. What are the trends?
Deshnee Govender (15:17.483)
It’s yes, like we mentioned earlier, you know, this is not localised to South Africa alone. It’s across the globe. And it can be largely attributed to, you know, AI digitisation and things like that. But we can also use AI and digitisation to our advantage as well, you know. We could actually use it to be one step ahead of the fraudsters and the criminals.
And you’ll see that the banking industry is actually being revolutionised now. There’s like Revolut, a totally digital bank, you know, that has now obtained its license. It’s currently operating in the UK and Europe and things like that, but it’s got its license now to actually operate, you know, in South Africa.
Then as from next year, do you know the PEPCOR group? They are actually coming out with their own bank. It’s called PlusB. So there’s a lot of other players that are going to be entering the market as well. And I think the key, you know, for all the banks or for the conventional banks and things like that is to see who can actually manage the monies or the resources, you know, of the citizens professionally and with integrity.
So those newcomers as well, you know, are going to bring a different kind of vibe to the market. And I think citizens will be tempted to go to banks where you can be assured, you know, that your resources are absolutely safe.
Chris Steyn (17:06.584)
Mm. Thank you. That was Governance, Compliance and Risk Expert. Deshnee Govender speaking to Biz News. I’m Chris Steyn. Thank you.
Deshnee Govender (17:19.076)
Thank you so much for the opportunity.
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