Going by an annual fraud report, one-third of the region’s businesses had this mindset during the pandemic.
An annual Global Identity and Fraud Report surveying more than 9,000 consumers and 2,700 businesses in 10 countries spanning North America, Latin America, Europe and the Asia Pacific region (APAC) has revealed that nearly one-third of respondents in this region favored making profits over boosting security and fraud prevention.
This mindset could increase the risk of an already vulnerable digital ecosystem for consumers across APAC, according to the firm that commissions the survey, Experian.
The 3,000 consumers and 900 business executives from Australia, India, Japan and Singapore who responded to the latest annual survey of three time-windows throughout the ongoing pandemic were found to be increasingly shifting to digital to meet consumers online. Some 8 in 10 indicated they currently had a digital online identity strategy in place for recognizing customers across digital platforms, while 73% were confident they had the right metrics and key performance indicators in place to effectively manage fraud.
Why fraud and security risks matter
As businesses focus on digitalization, the risk of fraud grows significantly as fraudsters can increase their scale of attack through faceless, automated schemes.
Yet, despite the growing fraud risk, there was a 16% decline in business intention to increase fraud management budgets from June 2020 to January 2021, with 53% of respondents expecting to do so in the next six months.
Overall, the APAC region reported the most significant change compared to the other regions globally, with India (59%) and Australia (57%) most likely to increase fraud management budgets, followed by Singapore (52%) and Japan (46%). These results indicate that businesses may not realize the same data and tools utilized to improve security and fraud detection can also enhance the customer experience when implemented properly.
The report also uncovered a mismatch between fraud detection and prevention methods adopted by businesses and consumer preferences. While businesses across the countries surveyed in the APAC region were still investing in traditional methods to mitigate fraud (security questions and passwords) APAC consumers preferred ‘invisible’ means of security. Some 72% felt the most secure while using physical biometrics or having a PIN code sent to their mobile device. This demonstrates a shift in consumer behavior (at least in the sample cohorts) away from traditional security measures—indicating that businesses should take a new approach to security, layering both ‘visible’ and ‘invisible’ methods.
Other APAC findings
With fraud rates continuing to rise along with the shift to digital commerce here, APAC respondents were prioritizing a safe and secure online environment: 56% indicated that security was the most important dimension when it came to an online experience. Additionally, three out of five APAC consumers expected that businesses should provide increased levels of security and data protection when going online.
These changing consumer expectations for security will affect businesses across all aspects of the customer journey, the report asserted, citing more than two-thirds of APAC respondents abandoning a transaction if they had to wait more than 30 seconds. This means fraud checks and authentication processes need to be fast and seamless to improve loyalty and trust.
Said Ben Elliott, CEO Asia Pacific, Experian: “Businesses need to strike a balance between ensuring a top-notch digital experience and keeping their fraud prevention program up to speed. Organized cybercrime leads to a rise in fraudulent activity during an economic downturn. When businesses invest in fraud protection, they are protecting themselves and their customers. While financial losses are the primary damage for businesses impacted by fraud, the collateral damage is customer trust—something even more difficult to regain once lost.”