The detection of fraud is a key concern for companies around the world, particularly for consumer banking and credit card companies. 78% of retail banking and cards companies are most concerned about fraud, leading industry sectors like consumer tech (75%), digital-only companies (70%), telecommunication firms (63%) and airlines (57%). Across the Asia Pacific, 59% of financial services companies will focus their investments in building fraud detection capabilities, far exceeding the second top investment priority of multi-factor authentication (22%).
These are the findings of two reports from leading information services company Experian. The Global Fraud and Identity Report was developed by Experian following interviews with more than 5,500 consumers and 500 business executives in 11 markets around the world, and the APAC-focused Fraud Management Insights 2017 was authored by Experian and leading ICT market research and advisory firm IDC. Covering ten markets across APAC, the Fraud Management Insights 2017 report surveyed 3,200 consumers and over 80 organisations from the Financial Services, Telecommunications (Telcos) and Retail sectors (collectively referred to as Service Providers), each with revenues of at least US$10m. 38 financial services companies from Australia, China, Hong Kong, India, Indonesia, Japan, New Zealand, Singapore, Thailand and Vietnam participated in the study.
FACING THE GROWING FRAUD THREAT IN ASIA
“Financial services companies are focusing on the real-time detection of fraud because they are at the frontline of attacks, and they realised that it is no longer enough to mitigate incidents only after it happens,” said Mohan Jayaraman, Regional Managing Director, Decision Analytics & Business Information, Experian Asia Pacific. “Across the board, companies are seeing the scale and variety of fraud growing into 2018 and with customers expecting seamless and fast digital transactions, they require proactive measures to balance security and customer experience.”
Overall, nearly half of financial services companies, 44%, in the region said that fraud has increased. Notably, 47% of respondents said that Online Fraud was increasing, followed by 42% seeing Card Fraud and 39% seeing Malware in Online Channels growing.
According to the Fraud Management Insights Report 2017, the top 5 fraud types that companies should look out for in 2018 include:
Ranking Fraud Type
1 Online fraud
2 Card fraud (including card not present fraud)
3 Malware in online channels
4 Identity theft
5 Malware in mobile channels
“As financial services companies seek to adapt to the fast-evolving fraud threat, they no longer have the luxury in reacting to fraud only after it happens and this is driving investments in data quality to fully understand their customers across multiple touch points and have a Single Customer View,” said Nick Wilde, Head of Fraud and Identity, Experian Asia Pacific.
A Single Customer View helps businesses have a 360-degree view of customers across their entire relationship with the company, enabling fraud detection and helping them better serve customers. However, over 39% of companies cited the lack of an overall data management strategy and siloed customer data as key impediments to implementation.
“We believe that once companies can improve their data quality and implement a Single Customer View, they would be able to improve their business results,” said Jayaraman. “When coupled with predictive analytics, banks and insurance companies can provide the right products at the right time to meet the need of customers, drastically improving customer satisfaction and countering the fraud threat.”
DIGITAL TRUST INDEX: FINANCIAL SERVICES AHEAD OF TELCOS AND RETAIL
The Fraud Management Insights 2017 report also included the Digital Trust Index, developed to provide a meaningful way to measure trust between customers and organisations, across regions and sectors. The index reviews a selection of criteria across industries and countries to determine the level of trust consumers have for digital services and offers a snapshot of consumer behaviour and expectations. A higher score indicates that consumers are satisfied with their digital transaction experience, while a lower score indicates a failure in trust.
Notably, Financial Services in New Zealand, Japan and Australia ranked highest in terms of digital trust, whereas Hong Kong, Thailand, Singapore and Indonesia ranked lowest.
The industry average was 4.95 out of 10 for the financial services industry, higher than the retail and telecommunications sectors with 2.40 and 2.14 regional averages respectively. While the financial services industry is clearly deemed as more trustworthy by consumers, the score of 4.95 indicates there is still some ways to go before consumers fully trust financial services players in the region.
Digital Trust Index: Country Rankings for the Financial Services Sector
The index is based on four key variables including the levels of digital adoption, industry preferences and fraud rates, and the effectiveness of companies’ fraud management capabilities.