Indian businesses turn to data analytics, ML to fight fraudulent practices

A recent report from PwC found that Indian businesses report a much higher incident of financial crimes than their global peers

Financial, economic and cyber frauds have become all-too-frequent in the country, affecting not just individuals but also establishments, causing wide-spread disruption to business activity. About six out of every ten businesses in the country have been a victim of fraud, corruption or some other type of financial crime in the past two years, according to a recent report. 

This is over and above what an ordinary Indian loses to cyber crimes every year. Indians saw their wallets drained of Rs 485 crore to fraud on Unified Payments Interface (UPI) platforms across 632,000 reported incidents during the ongoing financial year 2025 (FY25). 

For businesses, too, the nature and frequency of fraud has risen over the past two years. In 2022, about 52 per cent of surveyed businesses reported instances of fraud, according to the report from PWC. That number has jumped to 59 per cent in the country today, a significantly higher rate of incidence from the global average of 41 per cent. 

In terms of the nature of these financial crimes, procurement fraud, customer fraud, and bribery emerge as the top challenges to any business operating in the country. Procurement fraud is the most common with one in every two senior executives surveyed in the report stating that it is the ‘biggest problem faced by businesses’. 

As the name suggests, participants in a supply chain float inflated or fake invoices, collude with buyers or suppliers or change specifications of a product. In some cases, specifications are altered to ensure the supply of a product is not in the interest of an organisation, thereby favouring other bidders in return for a kickback. 

“Procurement fraud cuts across industries and processes, being one of the most disruptive economic crimes. The integrity of the procurement process is of paramount importance, as a company’s reputation rests on it,” said Puneet Garkhel, partner and leader (forensic services) at PwC.

 

Using tech to fight fraud

 

While it is challenging to disrupt a supply chain transaction on account of mere suspicion, organisations are increasingly turning to data analytics to mitigate and prevent such types of fraud. About 44 per cent organisations said they used data analytics to identify bid patterns. Organisations also employ a variety of techniques, including analysis of transactions before closing a deal, monitoring payments in real-time with the ability to block outgoing transactions, and supervision of payments after deals are completed. 

Advanced procedures including transaction monitoring systems employ machine learning (ML) and train models to detect suspicious activities and common patterns to track culprits. A mix of these interventions have enabled companies to strengthen weak links in a supply chain, revise vendor selection processes, adopt conflict of interest policies, and train procurement personnel.

 

Growing adoption data analytics

 

With the rate of growing fraud in businesses, the call for action is higher than the global average. Only 10 per cent of surveyed organisations in India did not use data analytics to support compliance as opposed to 23 per cent globally. Most of the technical intervention to combat corruption and financial crime was recorded at higher levels in India than overseas. 

Companies are also beginning to leverage data aggregation tools to both enable compliance monitoring and provide insights to improve effectiveness of programmes. Some have initiated ad hoc retrospective analysis of payments as part of their deals.

PwC’s Global Economic Crime Survey 2024 analysed the responses of 2,446 heads of organisations across the world, 91 of whom were from India. The report looked at the most disruptive economic crimes affecting their sector and ways of mitigating risks of fraud and non-compliance.