Card and e-money payments have been growing exponentially in recent years, especially in emerging Asia-Pacific (APAC) markets. China in particular saw a growth of 50 per cent per year between 2013 and 2017. Many merchants in APAC economies are reaping the rewards of this huge spike in eCommerce activity.
However, here have also been negative side effects, such as account take-overs, application fraud, and social engineering. Fraud itself is becoming a major concern for merchants and banks within the region as technology continues to advance and social media is adopted into operations. It is not difficult to see that fraudsters have more opportunities than ever to collect personal data.
It is not only professional fraudsters that must be considered, though. Customers grew become accustomed to having everything instantly available at their fingertips. They expect a seamless banking experience and affordable prices. Both these forces have pressured banks to streamline and digitize front- and bank-end processes.
So, what does that mean in a practical sense? In this post, we will take a look at the opportunities and growth seen in the APAC region. We will also discuss how financial institutions can best protect their customers in this new landscape.
The New APAC eCommerce Frontier
Despite the many difficulties brought on by the Covid-19 pandemic, the APAC region has undoubtedly entered a new eCommerce frontier. A recent report from PPRO shows that, even before the pandemic, the region’s eCommerce markets were growing at a rate of 27.3 per cent annually.
Consumers from Southeast Asian countries like Indonesia have reported the sales of online medicines for the first time. Meanwhile, we also saw a huge increase in grocery and food purchases. Vietnam, for instance, saw an increase of 42 per cent in online grocery shopping, followed up closely by healthcare and cosmetics at 21 per cent.
At the same time, consumers have become savvier. They possess their own distinct shopping preferences. If shoppers do not see their preferred payment option at checkout, most will simply abandon the purchase.
These industries are receiving more attention than ever. This means banks must ensure that they are prepared to deploy new payments opportunities…or run the risk of losing business.
Addressing the Problems
Incumbent financial institutions face direct competition from more digitally advanced neo-banks and payment providers. To remain competitive in the APAC region, they must offer clients faster onboarding, payment, and other banking services. These objectives are often accomplished through digital means.
However, FIs must be cautious not to compromise the customer experience or increase their costs by adding too many layers of security. The key is to strike a balance between streamlined operations and comprehensive security. This is the only way to stop fraud in its tracks without impacting experiences.
Here are the five points that should be addressed to help empower fraud risk management capabilities:
- Break up organizational silos: Allowing for greater collaboration by breaking-down artificial barriers within the organization. This can allow institutions to address fraud in a more agile, integrated, faster manner.
- Build an integrated technology platform: A common database, common transaction monitoring solutions, and an integrated case management solution. This platform will serve as a foundation to make use of more-advanced digital tools such as artificial intelligence, machine learning, and intelligent robotic process automation.
- Invest in analytical capabilities: Machine-learning algorithms can build and calibrate more-effective detection scenarios. This will be helpful in developing strategies and accounting for developing threats.
- Invest in intelligent automation: Investments in intelligent process automation for fraud investigations can speed up cases by over 50 per cent. This will bring down operational costs and allow faster response to the client.
- Empower clients through technology: Digital developments made direct customer engagement possible by empowering the client to add or disable certain security features. They may actively shape their own customer journey and raise their awareness of fraud risks.
Preparing for the Future
The consumer base in the APAC region is predominately young, connected, and comfortable with online shopping. Merchants and the banks who serve them need to be prepared for this new influx of activity. They must be ready to integrate Southeast Asian payment methods seamlessly and at-speed.
Technology will play a huge role in the future of APAC eCommerce. As banks take on more involvement in the APAC territory, it’s important that they build a foundation of digital tools that can detect fraud, while maintaining a positive customer experience that keeps them coming back for more.