Fraud Threats in Asia’s Financial Sector is Rising as per GBG and Chartis Research
GBG, the leading expert in global identity and location, in collaboration with Chartis Research, revealed that 8 in 10 Asian financial institutions and banks are facing significant challenges related to digital fraud detection, but are actively investing in technology and user experience to mitigate the risks and uphold customer confidence. The key findings are part of their latest report, ‘Building Trust in Digital Channels: A Study of Banking and Finance in Asia‘, that examines the challenges and advancements in fraud detection and prevention amidst record digital adoption rates in the region.
Rising Fraud Complexity and Frequency
There is a concerning trend in the increasing complexity and frequency of fraud incidents, with almost 90% of respondents seeing the evolving tactics and sophistication as the biggest challenge to fraud detection. Notably, scams and phishing attacks saw the most significant spikes, with 59% and 57% of respondents reporting an increase in these two typologies, respectively. Synthetic ID-based fraud has also come to the fore in recent times – a traditionally North American phenomenon – it has become more prevalent in Asia as fraud becomes more commoditised, with 58% reporting a rise in such cases.
Balancing Security with Customer Trust as Digital Adoption Rises
A striking 97% of respondents acknowledge the difficulty in maintaining a balance between security and customer experience, with a notable 79% considering it a substantial hurdle. This reflects the rapid push for digital adoption throughout Asia where real-time payments are now a mainstay, which naturally increases the vulnerabilities to fraud for both the financial institution and its clients. It is therefore imperative that these organisations ensure robust security measures are in place while providing a more assured customer experience, in order to maintain customer trust.
Legacy Systems Disrupt Accurate Fraud Detection, but Most Organisations Possess Platforms to Consolidate Fraud Into a Single Platform
Accurately detecting newer, more complex fraud typologies will require a multi-layered approach that integrates the traditional anomaly detection techniques with more advanced approaches such as neural networks. However, the presence of legacy systems and technology makes it harder to ingest and use additional data in existing fraud practices, with 64% citing this as a key reason for high false positive rates. This issue is exacerbated by the fact that organisations are already plagued by poor data – a sentiment shared by more than half of the respondents (52%).
Encouragingly, organisations are proactively addressing this issue, with 88% of respondents already possessing a single, consolidated platform that enables data interchange and sharing, to ultimately reduce their risk exposure to potential fraud and financial crimes.
Proactive Technological Investments Are a Priority
Banks and financial institutions in Asia have traditionally focused on recruiting staff to plug gaps in fraud detection. However, the study found that these organisations will intensify their investments in machine learning (ML) and artificial intelligence (AI) in the coming years (16% in 2023-24 to 68% in 2025-26), indicating a move away from traditional anomaly detection towards automated capabilities that can handle more complex tasks. This shift aims to reduce the burden on staff and high organisational costs while improving fraud detection efficiency.
In the report, Bernardi Susastyo, General Manager, Asia & Fraud APAC, GBG, said, “Our collaboration with Chartis sheds light on the pressing challenges faced by the banking and finance sector in Asia, emphasising the imperative for seamless customer onboarding and robust fraud prevention measures. As the ever-evolving fraud threats loom large, it is encouraging to see more of these institutions adopt a proactive security posture through emerging technologies.”
GBG is committed to revolutionising digital enterprise fraud risk solutions and combating fraud for organisations regionally and globally, empowering them to thrive in the digital age while safeguarding against financial crime,” he added.
For more findings, and to download the full study, please visit this link.
