Financial institutions in Asia Pacific lose US$390m to fraud every year

Losses are growing at 20-25% annually.

As e-commerce grows across Asia Pacific, so does the risk of online fraud. In a survey conducted at a fraud forum hosted by FICO, a predictive analytics and decision management software company, senior heads of fraud from across the region said that card not present (CNP) fraud is the fastest-rising area. 94% of attendees reported a rise in CNP fraud.

Mitigating CNP fraud is especially critical in APAC, with the region set to overtake North America as the largest e-commerce market in the world. Research firm eMarketer estimates that B2C e-commerce sales in APAC this year will reach US$525.2 billion, versus US$482.6 billion in North America.

FICO estimates that card fraud now costs APAC financial institutions some US$360-420 million each year, and losses are growing at an annual rate of 20-25 percent.

Here’s more from FICO:

 “Regional consumers have become more accepting of non-traditional banking platforms, substituting cash for mobile and online transactions,” said Dan McConaghy, president for FICO in Asia Pacific, who hosted the APAC Fraud Forum in Singapore. “As this shift occurs, we see criminals using social engineering, application fraud, data breaches and more to obtain card details. In order to maintain a positive customer experience, banks need to enhance such physical measures as chip and PIN cards, secured ATMs and one-time-passwords with solutions like predictive analytics. There’s an increasing need for a way to act in real-time across multiple channels.”

Recent studies have shown that the poor handling of fraud is a key reason for losing a customer’s trust. A 2013 study by MasterCard found that 40-45 percent of APAC consumers will change card providers after experiencing fraud.