ISLAMABAD: AI Banking solutions could play a crucial role in reducing fraud and cyber scams in Pakistan as experts urge financial institutions to deploy artificial intelligence to detect suspicious transactions in real time and strengthen customer protection.

The recommendations come as banking fraud complaints continue to rise despite preventive measures introduced by regulators and financial institutions.

According to the Banking Mohtasib Pakistan, fraud-related complaints increased to 4,615 in 2025, compared with 4,171 in 2024 and 3,489 in 2023, highlighting a growing cybersecurity challenge for the country’s financial sector.

Digital Banking Expands Cyber Risks

Pakistan’s rapid digital transformation has significantly improved financial inclusion while exposing banks and customers to evolving cyber threats.

The State Bank of Pakistan’s (SBP) Pakistan Financial Inclusion Index (P-FII) 2024 rose to 58.1, up from 54.8 a year earlier. Account ownership now stands at 67% of the adult population, driven by the expansion of digital banking, mobile wallets and electronic payment services.

However, the report showed the quality index remained comparatively low at 43.9, reflecting gaps in customer protection, financial literacy and service quality.

Experts said stronger cybersecurity measures are essential to maintain public confidence as more consumers adopt digital financial services.

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AI Can Detect Fraud in Real Time

Artificial intelligence specialist Muhammad Waleed said AI-powered systems can improve fraud detection by analysing millions of transactions instantly and identifying unusual behaviour with greater accuracy than traditional rule-based systems.

He urged commercial banks to invest in machine learning and advanced AI technologies to strengthen fraud prevention while enhancing cooperation among regulators, financial institutions and digital payment providers.

“Artificial intelligence has transformed fraud detection by improving both the speed and accuracy of identifying suspicious financial activity,” he said.

Cyber Threats Continue to Grow

Experts warned that phishing attacks, identity theft, fake social media advertisements, UAN spoofing and account takeover scams remain among the most common cyber threats targeting Pakistani banking customers.

According to cybersecurity company CTM360, phishing attacks in Pakistan increased tenfold between 2019 and 2023, while malware infections, stolen credentials and payment card data leaks also recorded significant growth during the same period.

Banks Urged to Modernise Security Systems

Abdus Samad Khan, Chief Executive Officer of iPath, said banks should modernise fraud management systems by integrating AI across commercial banks, branchless banking services and fintech platforms.

He said cybercriminals continuously adapt their tactics, making intelligent and self-learning security systems essential for protecting digital financial services.

Experts also stressed that technology alone cannot eliminate fraud. They called for stronger public awareness campaigns, improved financial literacy, enhanced regulatory oversight and closer cooperation between banks and law enforcement agencies to safeguard Pakistan’s growing digital banking ecosystem.