India’s digital financial ecosystem has grown remarkably in the past decade. This necessitated concerted efforts by the ecosystem to encourage trust among users, because India is historically a low trust society.
As a result of this, we have seen a rapid surge in digital payments, online banking, and online loans which has taken forward financial inclusion for the underserved. However, the remarkable progress has inadvertently unleashed a surge in financial fraud as citizens are being duped of thousands of crores of their hard earned money.
In the first 6 months of FY 2024-25, banks in India had reported a 27 percent increase in fraud cases compared to the previous year, with total losses amounting to INR 21,367 crores. Cyber fraud had also spiked drastically, rising fourfold over the previous year to INR 170 crore. These figures are a reminder that our financial systems continue to rely on outdated security measures that have already proved itself ineffective against fraudsters.
Common security protocols such as PINs, passwords, and OTPs (one-time passwords), both in online and telephonic banking, have repeatedly failed in the face of phishing attacks, social engineering, and account takeovers.
Fraudsters are now using sophisticated tactics such as impersonating bank officials, mimicking customer voices, or exploiting call center systems to manipulate security checks. Moreover, the increasing use of voice cloning and deepfake technology further undermines these security frameworks. In response, many banks around the world are actively reassessing and redesigning their identity verification systems to enhance resilience.
While biometric identification methods like thumbprints and iris scans are inherently more secure than passwords, their adoption has been limited by hardware constraints particularly in lower-end devices that do not support fingerprint or iris scanning. In contrast, virtually all mobile phones and computers, regardless of their specifications, are capable of capturing voice.
Voice biometrics presents a compelling solution in this context. It requires no additional hardware and is accessible across a wide range of devices. More importantly, it is inherently language-agnostic, making it ideal for India’s linguistically diverse population. By analyzing unique vocal attributes such as tone, pitch, cadence, and speech patterns, voice biometrics can provide secure, intuitive authentication. Unlike passwords, voice is far harder to replicate convincingly, even with advanced deepfake technologies.
Banking applications on mobile phones have started incorporating fingerprint-based login, but a more robust approach would involve multi-factor authentication that includes voice. Internet banking systems can also integrate voice as an additional layer of authentication, alongside existing OTP-based verification. This multi-modal security framework would significantly strengthen resistance to identity fraud.
Voice biometric systems can also be employed in banking and financial services industry (BFSI) call center operations, where fraudsters frequently exploit weaknesses by impersonating customers or bank officials. Voice-based verification adds a strong, real-time layer of protection in such scenarios. Moreover, SIM card spoofing and OTP interception common in telecom fraud can be effectively mitigated by integrating voice biometrics.
Several global institutions have already recognized the value of this approach. Banks such as Barclays, HSBC, and Tangerine have incorporated voice authentication into their customer service operations, improving both user experience and security.
Beyond identity verification, AI-driven voice biometric systems can be used by telecom service providers (TSPs) to proactively detect and flag fraudulent activity. These systems are capable of identifying anomalies in speech, tone, or behavioural patterns, enabling institutions to issue real-time alerts and thwart fraud at its inception.
Voice biometric technologies are evolving rapidly, with advanced features such as liveness detection now able to distinguish between a live speaker and synthetic or recorded voices. These improvements significantly bolster defences against deepfake-enabled fraud. Given the growing sophistication of fraudsters, now is an opportune moment to integrate such cutting-edge systems into essential financial services.
Investing in voice biometric technologies is not just a matter of technological advancement, it is a social imperative. A large proportion of financial fraud victims in India are elderly, semi-literate, or digitally marginalized. For these populations, voice-based authentication is not only more intuitive but also markedly more secure than conventional methods. Voice, as a medium of interaction, aligns naturally with India’s oral communication culture, especially among those with limited digital literacy.
By deploying AI-enabled voice biometrics, we can proactively mitigate fraud, build a robust trust layer in digital finance, and extend meaningful protection to the most vulnerable. India has an opportunity to lead in this space not only in securing its digital ecosystem but in setting a global standard for inclusive and secure digital authentication. India should take a lead on this.
(Ranjan Khanna is Principal Additional Director General, Directorate General of Export Promotion, CBIC; Dr. Jaijit Bhattacharya is President, Centre for Digital Economy Policy)
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