Deepfake Fraud Hits Banking Sector
Key Highlights
- Deepfake videos are bypassing Video KYC and liveness checks.
- Fraudsters using open-source AI tools for identity spoofing.
- NBFC reportedly suffered fraud worth ₹15–20 crore.
- RBI data shows banking fraud amount surged 46.4% in FY26.
- Deepfake threat expanding beyond banking to e-commerce and social media.
Story
New Delhi, June 20: Deepfake technology has emerged as a serious threat to India’s banking, financial services and insurance (BFSI) sector, with fraudsters increasingly using AI-generated identities to bypass video KYC and customer verification systems.
Industry experts warn that customized applications built on open-source AI models are enabling cybercriminals to conduct sophisticated fraud at minimal cost. These deepfake videos have become so realistic that distinguishing them from genuine identities is becoming increasingly difficult.
According to industry sources, the threat has already entered the BFSI ecosystem. In one reported case, manipulated applications allegedly passed verification and underwriting processes, resulting in fraud worth ₹15–20 crore at a non-banking financial company (NBFC).
Experts say fraudsters are using specialized tools distributed through Telegram channels and dark web marketplaces. Instead of relying on advanced frontier AI models, criminals are leveraging smaller, locally run models that can operate on consumer-grade hardware, making deepfake creation faster and more accessible.
One of the biggest concerns is the ability of deepfakes to defeat liveness detection systems designed to verify whether a person appearing during video KYC is physically present. Fraudsters can inject manipulated images or videos into compromised devices, allowing fake identities to pass verification checks.
The growing threat has prompted the Indian Cyber Crime Coordination Centre (I4C) to issue advisories warning that cybercriminals are increasingly using AI-powered techniques to evade existing security controls.
Industry leaders note that deepfake-enabled fraud is becoming easier due to the availability of low-cost AI tools and reduced technical barriers. Companies are now developing advanced deepfake detection systems capable of identifying manipulated images and synthetic identities before they can be used in financial transactions.
The financial impact is already significant. According to the Reserve Bank of India’s annual report, the banking industry reported frauds worth ₹48,021 crore in FY26, a sharp increase from ₹32,803 crore in FY25, marking a rise of 46.4 percent.
Experts emphasize that securing user devices is becoming as important as strengthening verification systems. If a device itself is compromised, fraudsters can insert manipulated content that may successfully pass security checks.
While banking remains a primary target, the threat is rapidly expanding to e-commerce platforms, quick-commerce services, social media networks, dating applications, and other digital ecosystems. Cybersecurity specialists believe deepfake-driven fraud will remain one of the biggest digital risks facing businesses and consumers in the coming years.
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