Asia Pacific (APAC) has the highest-growing fintech industry in the world with some of the biggest players in the region. Despite over 41% of the top 100 global fintech innovators originating from the region, when it comes to digital transformation and technology adoption, financial service institutions across APAC are still very much in the incremental stage. This is especially the case in Southeast Asia (SEA), where over 70% of adults lack sufficient access to financial services and millions of small-medium-sized businesses across the region face large funding gaps.
Naturally, any movements made to ensure opportunities are offered so that the region’s sector can meet its full potential must be encouraged. Who doesn’t want to offer their consumers a more inclusive, flexible and convenient way to bank?
However, embracing digital transformation means accepting that the traditional way of banking is no longer enough.
If financial services across the APAC and SEA region wish to capitalise on the opportunities that digital banking can deliver, they need to go beyond legacy systems and processes. Instead, they should adopt a multi-layered approach that brings together vital elements in cyber security, digital experience and fraud operations. Indeed, while many have embraced automation at onboarding, the rise in synthetic identity fraud means a more sophisticated approach is required.
One clear move? Reviewing the approach to manual review.
The three challenges faced by incumbent banks.
Before we dig into optimising manual review, let’s first look at the three main challenges faced by incumbent banks in today’s digital economy.
Naturally, in countries and regions where such a large population are unbanked and thin file, rapid digitisation is the only way to bring new consumers into the financial system. However, with this online surge, comes an increased vulnerability to fraud.
Indeed, the projected total cost of financial crime across financial institutions worldwide is $274.1 billion, an increase of $60 billion in a span of only two years. Synthetic identity fraud, specifically, is the fastest-growing crime, costing banks an estimated $6B annually.
Meanwhile, financial institutions across APAC, over any other sector, are experiencing the sharpest increase in fraud than before the COVID-19 pandemic. This is particularly evident in the Philippines, where digital fraud attempts have spiked 50% over the past year alone. In fact, APAC is at the epicenter of global data breach incidents, representing 68% of the global tally of breaches analysed in 2022. Furthermore, 29% of consumers across six key APAC markets have been victims of online fraud, which is higher than global figures.
From cyberattacks, synthetic identities, promo abuse and more, sophisticated fraud demands sophisticated fraud prevention.
Consumers across APAC are among the most enthusiastic adopters of digital payments in the world, with 88% embracing the convenience and personalization that online banking brings. In fact, high levels of online and mobile usage across the region are fuelling consumer demand for improvements, with 80% of APAC consumers wanting a better online experience from their banking provider.
In fact, research shows that 40% abandon a 10+ minute application. Every 10 seconds added to the application process correlates roughly to a 5% increase in application abandonment. In 2019 alone, application abandonment resulted in a $3.3T loss for the global commercial and business banking market.
However, consumers in APAC don’t just expect a friction-free online experience, they demand security too. Indeed, security is the most important factor for online consumers in Japan (89%), Australia (83%) and Singapore (82%).
Meanwhile, a FICO survey into consumer expectations in Indonesia show that while ease of use is the number one consideration for selecting a new account, 66% of consumers consider good fraud protection as a top three priority. In fact, one in six Indonesian consumers will leave a bank for a competitor if the bank’s response to scams isn’t up to par.
Today’s modern banks must adapt their ways, adopting a customer-first approach to digital transformation.
Cost and revenue optimisation
Despite the digitisation of KYC compliance, the process of KYC verification is a necessary but costly burden for many financial institutions. In fact, a recent global study suggests millions of dollars are spent every year by financial and corporate institutions inefficiently onboarding and maintaining clients, with more than half of financial institutions stating 31-60% of their KYC review tasks are still being completed manually.
Furthermore, promo abuse adds insult to injury with financial institutions spending big on compliance checks for fraudsters. In SEA alone, 75% of surveyed organisations have experienced a significant financial impact on their business due to promo fraud, reporting a loss of 31% in their annual marketing spend as a result.
To mitigate this cost, along with the losses that occurred due to the previously mentioned instances of fraud and customer churn as a result of poor user experience and insecure onboarding and transactions, we come back to this need for a multi-layered approach to digital identity authentication.
Digital identity verification with Ekata
Ekata’s Pro Insight is a seamlessly integrated SaaS tool that empowers manual review teams to better identify online risk, approve good transactions and investigate fraud on a global scale. Powered by Ekata’s Identity Engine, Pro Insight leverages over seven billion identity elements and analyses over behaviours. This, in turn, enables financial institutions the ability to make more confident, intelligent risk decisions about a consumer’s identity – all on a simple manual review interface.
As the leading manual review tool that enables agents to investigate both the validity of identity elements (such as name, phone, email, IP address and address), as well as the activity and usage patterns of those elements, Pro Insight offers a crucial advantage to financial institutions competing in today’s digital economy. Indeed, with a real-time risk score, financial institutions can identify high-risk and low-risk applicants and, in turn, determine which workflow is most appropriate; high-risk applicants require costly (but necessary) authentication processes, while low-risk applicants enjoy a more streamlined experience.
This approach increases revenue with higher acquisition rates, optimises onboarding, reduces operational costs and mitigates fraud loss all in one fell swoop. Talk about a new digital era!
To learn more about how Pro Insight helps financial institutions meet the challenges of today’s digital economy, get in touch with an Ekata expert today.