SINGAPORE, April 15, 2019 /PRNewswire/ --
Highlights:
- 74 percent of Asia Pacific
(APAC) banks surveyed believe that cases of fraud in their
country will increase moderately or significantly in
2019.
- Prioritizing risk management over customer convenience,
more than 50 percent of APAC banks' continue to simply block
cards on the first fraud alert. Only 6 percent will
keep the card open while trying to confirm fraud with the
customer.
- Overall fraud losses remain the leading indicator for 80
percent of fraud departments at APAC banks. Only six percent of
APAC banks ranked customer satisfaction as their number one
metric.
For more information:
https://www.fico.com/en/products/fico-falcon-platform
Almost three in four banks in Asia
Pacific anticipate that fraud in their country will increase
in 2019, according to a recent poll by FICO. Of specific concern
are transactions completed when neither the card nor the cardholder
is physically present (card-not-present or CNP fraud), as well as
cards taken out by criminals under false identities (application
fraud). These were identified as the two key concerns, as well as
the biggest fraud challenges faced by banks in 2019.
"The volume and velocity of transactions is growing in
Asia," said Dan McConaghy, president of FICO in Asia Pacific. "Over 50 percent of global
online retail sales in 2018 originated from the region. This growth
in ecommerce along with the efforts of banks to digitize more
services has seen a change in fraud risk. Dealing with an ocean of
transactions means that AI and machine learning are essential when
it comes to detecting fraud."
The survey found that efforts to keep up with changing fraud
patterns remain mixed. Most APAC banks surveyed continue to take a
precautionary approach to stopping fraud. More than 50 percent of
APAC banks continue to simply block cards on the first fraud
alert, a rate that remains unchanged from the 2017 survey. In
contrast, 6 percent will keep the card open while trying to
confirm fraud with the customer. Positively, this number has
doubled since the same question was asked in the previous poll.
"While protection against fraud is important, some banks are
still struggling to balance prevention with customer convenience,"
said McConaghy. "Smart communications is one tool lenders
can use to deliver a frictionless customer experience. Engaging
customers with an automated SMS or call to check if a transaction
is genuine, while they are still at the register, engages them in
the protection of their account and can have a positive influence
on their impression of the bank."
Interestingly, banks in the region are still measuring their
fraud departments on key fraud metrics other than customer
satisfaction. Overall fraud losses remain the leading indicator for
80 percent of APAC banks, followed by revenue at 10 percent. Only
six percent of APAC banks ranked customer satisfaction as their
number one metric and only four percent said customer attrition was
their key measurement.
"The results are a little surprising as fraud rates are still
relatively low, even though they are starting to climb," said
McConaghy. "In developed markets where their lenders compete
over share of wallet, we start to see a greater emphasis on
customer experience. Potentially, what we are seeing is that in
some organizations the fraud department remains a more siloed
operation. However, as fraud levels climb, increased levels of
customer churn are likely to shift the priorities for banks."
Of the banks surveyed, 54 percent of respondents said there
would be a moderate rise in fraud in 2019 while 20 percent said
there would be a significant jump.
Identity theft also remained a key priority for four-in-ten
banks. Last year's survey found that for one in five banks
the number of fraudulent applications for credit cards sat between
five to 10 percent.
"Exposure is increasing in this area, given the rise in digital
customer acquisition and the proliferation of compromised data from
cyberattacks in APAC," said McConaghy. "A recent
report stated that APAC accounts for 35.9% of global
cybersecurity events and up to 27.2% of compromised records
worldwide. However, the actual figures could be much higher since
most countries in Southeast Asia
don't require a compulsory report of data breaches which means
fraudsters are better armed with identity-based data than ever
before."
FICO surveyed 50 executives from financial institutions across
the region at the annual FICO Asia Pacific Fraud Forum held in
Bali, Indonesia.
About FICO
FICO (NYSE: FICO) powers decisions that
help people and businesses around the world prosper. Founded in
1956 and based in Silicon Valley, the company is a pioneer in the
use of predictive analytics and data science to improve operational
decisions. FICO holds more than 195 US and foreign patents on
technologies that increase profitability, customer satisfaction and
growth for businesses in financial services, manufacturing,
telecommunications, health care, retail and many other industries.
Using FICO solutions, businesses in more than 100 countries do
everything from protecting 2.6 billion payment cards from fraud, to
helping people get credit, to ensuring that millions of airplanes
and rental cars are in the right place at the right time.
Learn more at www.fico.com.
Join the conversation on Twitter at @FICOnews_APAC.
FICO is a registered trademark of Fair Isaac Corporation in the
US and other countries.
View original content to download
multimedia:http://www.prnewswire.com/news-releases/fico-survey-3-in-4-apac-banks-believe-fraud-will-increase-in-2019-300831921.html
SOURCE FICO