A new global report by Experian shows businesses across the Asia Pacific (APAC) region are deprioritising security and fraud prevention, as nearly one-third favour an emphasis on revenue generation. This approach could increase the risk of an already vulnerable digital ecosystem for consumers across the region.
This is according to Experian’s 5th Global Identity and Fraud Report, which included respondents from Australia, India, Japan and Singapore. Across these four markets, businesses are increasingly shifting to digital to meet consumers online: 8 in 10 say they currently have a digital online identity strategy in place for recognising customers across digital platforms. At the same time, 73% are confident they have the right metrics and KPIs in place to manage fraud effectively. As businesses focus on digitisation, the risk of fraud grows significantly as fraudsters can increase their scale of attack through faceless, automated schemes.
Despite growing fraud risk due to digitisation, there was a 16-percentage point decline in business intention to increase fraud management budgets from June 2020 to January 2021. Half (53%) expected to do so in the next six months. Overall, the APAC region reported the most significant change compared to the other regions globally, with India (59%) and Australia (57%) most likely to increase fraud management budgets, followed by Singapore (52%) and Japan (46%). These results indicate that businesses may not realise that the same data and tools utilised to improve security and fraud detection enhance the customer experience if implemented properly.
The pandemic caused a surge in digital activity, far greater than expected, and this trend is not likely to go away. In fact, nearly half (46%) of consumers from the countries surveyed anticipate increasing their spending on items purchased online in the next three to six months. With fraud rates continuing to rise, APAC consumers are prioritising a safe and secure online environment – 56% indicate that security is the most important dimension when it comes to an online experience. Additionally, three out of five APAC consumers expect that businesses should provide increased levels of security and data protection when going online.
“It’s understandable that businesses are focusing on revenue generation, digitisation, and creating a better digital customer experience, especially in the context of a pandemic. However, the rise in digitisation means greater risk for businesses, and without a focus on fraud prevention, they will be prone to losses in the long term. While creating a great online consumer experience is important, enterprises who put all their money into the digital experience at the expense of fraud prevention will be targeted by fraudsters, who have sophisticated ways of identifying weaker online platforms and targeting them. Businesses need to strike a balance between ensuring a top-notch digital experience and keeping their fraud prevention programme up to speed,” says Ben Elliott, CEO Asia Pacific, Experian. “Organised cybercrime leads to a rise in fraudulent activity during an economic downturn. When businesses invest in fraud protection, they are protecting themselves and their customers. While financial losses are the primary damage for businesses impacted by fraud, the collateral damage is customer trust – something even more difficult to regain once lost.”
The report also uncovered a mismatch between fraud detection and prevention methods adopted by businesses and consumer preferences. While businesses across the countries surveyed in the APAC region are still investing in traditional methods to mitigate fraud, such as security questions and passwords, APAC consumers prefer invisible means of security. In fact, 72% feel the most secure while using physical biometrics or having a PIN code sent to their mobile device. This demonstrates a shift in consumer behaviour that moves away from outdated security measures, indicating that businesses should take a new approach to security, layering visible and invisible methods.
These changing consumer expectations for security will affect businesses across all aspects of the customer journey. For example, more than two-thirds of APAC consumers will abandon a transaction if they have to wait more than 30 seconds. This means fraud checks and authentication must be fast and seamless to improve loyalty and trust. Investments by APAC businesses into advanced customer authentication methods translate into improved consumer opinion.
The annual Global Identity and Fraud Report surveyed more than 9,000 consumers and 2,700 businesses during three waves throughout the pandemic across 10 countries spanning North America, Latin America, Europe and Asia Pacific. This includes the 3,000 consumers and 900 business executives across four Asia Pacific countries – Australia, India, Japan and Singapore.
The Global Identity and Fraud Report can be downloaded here.