Despite the tireless efforts of companies and technology providers, fraudsters continue to steal billions of dollars every year.
by Telesign’s “State of Fraud 2024” WhitepaperAccording to customer identity and engagement solutions provider , fraud victims in the United States are expected to lose approximately $8.8 billion in 2022, and globally, that figure could rise to $95.9 billion by 2027.
This predicament is particularly acute for fintech companies in the Asia Pacific (APAC) region, where the sector is expanding rapidly.
The evolving fraud landscape
There has been a significant increase in corporate data breaches in the Asia Pacific region, with serious implications for fintech companies.
According to a report by IBM Security, Asia Pacific will have the highest average cost of a data breach globally in 2021, coming in at an average of US$3.24 million.
This highlights the need for strong anti-fraud measures among fintech companies in APAC, given the significant economic impact of data breaches in the region.
In addition to data breaches, generative AI tools pose a clear challenge for fintechs in APAC, allowing fraudsters to create sophisticated phishing scams and synthetic identities.
This technology allows fraudsters to exploit vulnerabilities in fintech platforms, necessitating advanced fraud prevention strategies.
Additionally, the APAC region has been a pioneer in adopting innovative payment methods such as buy now, pay later (BNPL).
According to a McKinsey report, Asia Pacific accounted for approximately 40% of global BNPL transaction volume in 2020.
However, this rapid adoption has also attracted fraudsters, leading to a significant increase in BNPL fraud in the region.
Synthetic identity fraud is a common fraud method
Fintech companies in Asia Pacific are grappling with the growing threat of synthetic identity fraud, in which fraudsters use personal identifiable information (PII) of real individuals to fabricate a fake persona.
This burgeoning range of fraud types poses significant challenges to the identity verification process for fintech companies in APAC.
Account takeover (ATO) and promotional abuse are common fraud techniques affecting fintechs in APAC.
An ATO incident could result in significant financial loss and reputational damage to fintech companies operating in the region.
Implications for both consumers and fintech brands
Fraud not only harms consumers’ financial and mental health, but also erodes trust in fintech brands in APAC.
Fintech companies must prioritize fraud prevention to maintain customer loyalty and brand integrity in the highly competitive Asia-Pacific market.
Balancing security and user experience
Fintech companies in APAC are struggling to balance robust security measures with seamless user experience.
The PwC report highlights that 67% of Asia Pacific consumers prioritize security when using digital services, highlighting the importance of an effective fraud prevention strategy, while at the same time not compromising the user experience.
In conclusion, fintech companies in APAC need to proactively address the growing threat of fraud by implementing comprehensive fraud prevention strategies tailored to the region’s specific challenges.
By prioritizing security while ensuring a positive user experience, fintechs in APAC can build trust with their customers and safely navigate the evolving financial technology landscape.
Explore modern approaches to fraud prevention in Telesign’s whitepaper to reduce buyer friction, combat fraud, protect your brand, and increase consumer trust.
Download Telesign’s “State of Fraud 2024” Whitepaper here.
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