Optimizing Fraud Management in the Asia Pacific Digital First Economy

Optimizing Fraud Management in the Asia Pacific Digital First Economy



A discussion into the changing APAC digital landscape

The Rise of the Digital Economy

Here’s what we already know: the potential of the digital economy – the broad range of economic activities that use digitized information and technology to drive productivity growth – has been recognized for decades by numerous business leaders, innovators, researchers, and authors.

For Asia specifically, the rise has been swift. Even in 2019, before the world was hit with a global pandemic, Bloomberg reported that Southeast Asia’s internet economy was set to top $100 billion. The same year – again, mere months before a worldwide lockdown – an estimated 70% of new economic value created over the next decade was set to be based on digitally enabled platforms across Asia.

Recently, Tom Donlea, Ekata’s Vice President of the Asia Pacific region, sat down with Zhuo Qijuan (CJ), Principal of Managed Risk Services, Asia Pacific at Cybersource and Aurelie Saada, Microsoft’s APAC Risk Lead, to talk the Asia Pacific Digital First Economy, and discuss the key trends, 12 months post lockdown, that are impacting Fraud Management teams across APAC.

Covid-19 Complexities and eCommerce

First, some background: We know that eCommerce grew tremendously during the pandemic (so much so that, according to data released last year from IBM’s U.S. Retail Index, the shift away from physical stores to digital shopping was accelerated by five years.) Within the APAC region specifically, Tom estimates that nearly the entire population of the Tokyo metro area became eCommerce users– that’s 40 million people.

“And let’s not forget,” Tom reminds us. “These are unsophisticated users of technology, websites, and apps – they’re going to be preyed upon by social engineering, their identities are going to be available for identity theft and synthetic identity fraud. This is a problem.”

Within APAC alone, Tom warns, these issues will be significant and will be faced by the clients of both CJ and Aurelie. And globally, by 2024 an estimated $43 billion will be lost due to online payment fraud (Juniper Research – from webinar).

In response to these stats, CJ at Cybersource agrees that the operational changes caused by COVID-19 have introduced significant and new fraud complexities for small and large companies alike. Such complexities include:

• Card Attacks – card testing, bot attacks, and spikes in corporate card fraud
• Card Delivery Attacks – contact-free deliveries, new emerging hotspots for fraud, and curb-side pickup fraud
• Account Attacks – phishing scams, account origination fraud, and account takeover fraud

The real problem, CJ articulates, is that businesses know fraud is an issue but they don’t have the right solutions in place to fight it.

“52% of merchants are aware there is a problem. They have to fully digitalize the customer experience – and they don’t have the capabilities to do this. They don’t have the real time insights.”

Meanwhile, Aurelie at Microsoft witnessed the same trends, specifically with account takeover.

“One of the major challenges we are facing is related to account takeover. This is really signalling to the tremendous increase we saw in offline traffic in the “new normal” of the remote work environment.”

The total cost of account takeover fraud worldwide? (can we ask for specific reference and numbers from Aurelie here – it’s not clear in webinar. But it’s a vital number!)

“It’s doubled since 2019,” states Aurelie.

The Rise of Fraud

Meanwhile, while eCommerce retail booms, projecting a worldwide estimate of $4.1 Trillion by this year alone, fraud is booming too; with a total economic impact of $250 billion per year, and $90 billion (-2.2% of revenue) in direct eCommerce fraud losses.

In Asia alone, as Aurelie states, the expected growth rate of fraud is 17% per year. And still, investing in fraud tools – especially in Asia, was not top of mind for many merchants. In fact, only 39% of businesses across industries affected by fraud in Asia use automations transactions risk scoring. Only 545 use real-time transaction tracking, and just over half use identity authentication. (Lexus ref from Aurelie).

“This is a growing market, the digital economy,” emphasizes Aurelie. “You have to spend money to make money. Not investing in fraud management solutions (like biometric detections, AI, etc) means losing to fraud.”

Aurelie predicts an overall $10.4 billion dollar spend on fraud management solutions by 2023; that’s a 12.9% growth rate from $5 billion dollars spent in 2017.

Both CJ and Aurelie breakdown not only the need to invest in machine learning technology, and innovative software to help oversee fraud and risk management (such as Cybersource’s Decision Manager app), but also admit knowing the future is not clear.

What’s Next? Agility, Proactivity, and Balance.

“What lies ahead in relation to fraud prevention?” asks Aurelie, “I have no clue! What I do know if that technology will drive the trends, and the more agile and proactive merchants are, the more they will win the race against fraud.”

CJ stresses the need for balance, and acknowledges that one size does not fit all; each merchant’s risk is unique, their customers are unique, and their appetite for risk they are willing to take on is unique. But expertise and data insights matter.

WATCH our webinar Optimizing Fraud Management in the APAC Digital First Economy

To learn more about how your team can better be prepared “without knowing the future,” please contact an Ekata expert today.

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