Billions Lost to Fraud Despite Efforts, APAC Fintechs Grapple with Rising Threats

Billions Lost to Fraud Despite Efforts, APAC Fintechs Grapple with Rising Threats

by May 27, 2024

Despite tireless efforts from businesses and tech providers, fraudsters persist in siphoning off billions annually.

According to the “2024 State of Fraud” whitepaper by Telesign, a customer identity and engagement solutions provider, U.S. fraud victims suffered nearly US$8.8 billion in losses in 2022, with global projections soaring to a potential US$95.9 billion by 2027.

This predicament is particularly acute for fintech firms in the Asia-Pacific (APAC) region, where the fintech sector is rapidly expanding.

The Evolving Fraud Landscape

APAC has seen a significant uptick in corporate data breaches, profoundly impacting fintech companies.

As per IBM Security’s report, APAC bore the highest average cost of a data breach globally, averaging US$3.24 million in 2021.

This underscores the critical necessity for robust fraud protection measures among APAC fintechs, given the substantial financial ramifications of data breaches in the region.

In addition to data breaches, generative AI tools pose a distinct challenge to APAC fintechs, empowering fraudsters to craft sophisticated phishing lures and synthetic identities.

This technology enables fraudsters to exploit vulnerabilities in fintech platforms, necessitating advanced fraud prevention strategies.

Additionally, the APAC region is a frontrunner in adopting innovative payment methods like Buy Now, Pay Later (BNPL).

According to a report by McKinsey, APAC accounted for nearly 40% of the global BNPL transaction volume in 2020.

However, this rapid adoption also attracts fraudsters, leading to a significant increase in BNPL fraud in the region.

Synthetic Identity Fraud Among Common Fraud Tactics

APAC fintechs grapple with the escalating threat of synthetic identity fraud, where fraudsters fabricate fake personas using real individuals’ Personally Identifiable Information (PII).

This burgeoning fraud type poses significant challenges to fintech firms’ identity verification processes in APAC.

Account Takeover (ATO) and promotion abuse are common fraud tactics affecting APAC fintechs.

ATO incidents can result in substantial financial losses and reputational damage for fintech companies operating in the region.

Impact on Both Consumers and Fintech Brands

Fraud not only harms consumers’ financial and mental well-being but also erodes trust in APAC fintech brands.

Fintech companies must prioritise fraud prevention to maintain customer loyalty and brand integrity in the fiercely competitive APAC market.

Balancing Security and User Experience

APAC fintechs grapple with balancing robust security measures and a seamless user experience.

A report by PwC highlighted that 67% of APAC consumers prioritise security when using digital services, indicating the importance of effective fraud prevention strategies but at the same time not compromising user convenience.

In conclusion, APAC fintechs must proactively address the growing fraud threat by implementing comprehensive fraud protection strategies tailored to the region’s unique challenges.

Prioritising security while ensuring a positive user experience enables APAC fintechs to build trust with customers and navigate the evolving financial technology landscape safely.

Explore modern approaches to fraud protection in Telesign’s whitepaper to reduce buyer friction, combat fraud, protect your brand, and foster consumer trust.

Download the “2024 State of Fraud” whitepaper by Telesign here

 

Featured image credit: Edited from Freepik