Asia Pacific is a vast region, housing a wide range of markets that vary greatly in terms of both size and economic maturity. However, despite the huge differences apparent in the region, there are some trends that have reached all countries. While still a predominantly cash-based region, a younger demographic, an increase in disposable income, and a high mobile internet penetration rate has meant the digital economy has seen significant growth in recent years. According to Experian’s 2019 Identity and Fraud Report, consumers in the region use their mobile devices primarily for online shopping and banking and, as a result, the e-commerce market in Southeast Asia is growing so rapidly that it is on its way to surpassing the $200bn mark that it was predicted it would reach by 2025 (Google).
The acceleration of the digital economy not only brings great opportunities for financial institutions (FIs) to take advantage of, it also brings about new challenges that they have to face. While consumers expect to have convenient and safe experiences online, online fraud continues to evolve and grow as fraudsters become more sophisticated and quicker to adapt their approaches. Although this is a familiar tale for FIs around the globe, online fraud in Southeast Asia seems to be particularly problematic, accounting for 40 percent of Asia Pacific’s total fraud losses in 2019 (Fraud rising: How bots and malware are compromising APAC’s Apps, AppFlyer).
Vietnam: a hot bed for bots
Vietnam’s fraud rate is the highest in Southeast Asia (59.2 percent). With anti-fraud measures slower to develop than the economy, fraudsters are seeing this emerging market as a perfect target in which to carry out their attacks. According to a 2018 PwC report, 52 percent of Vietnamese businesses had suffered from fraud attacks in the previous two years, 20 percent of which were classed as cybercrime. The use of bots is one of the most common ways fraudsters perform fraudulent attacks in the country, and with financial institutions investing heavily into digitalisation and digital banking, they are certainly not immune to them.
The country has seen a number of high-profile network attacks on banking infrastructure in recent years, whereby fraudsters have taken advantage of loopholes in the bank’s system and its customers have had money taken from their accounts, despite not performing any transactions. In 2018, there were 8,319 cyber-attacks on Vietnamese banks and 560,000 known computers affected by malware capable of stealing banking information, resulting in a potential loss of $642m (Ernst & Young). This is a major problem for FIs as, according to KPMG, less than 25 percent of fraud losses is actually recovered, not to mention the irreversible damage it causes to the FI’s reputation.
Tackling the fraudsters
Fraud prevention is key. However, the implementation of fraud management systems and tools in Vietnam is inconsistent. FIs need to treat fraud prevention as an ongoing initiative and stay alert, ensuring a close eye is constantly kept on their networks and that there are no weak links in their technology stack where a fraudster could take advantage.
FIs should partner with organisations that offer the technology and solutions that will address the issue of fraud and provide the necessary measures to protect both themselves and their customers. With fraudsters able to adapt and change their approach quickly, FIs need to be agile enough to try to outpace them and respond to new threats efficiently. Optimising their fraud strategy by putting a comprehensive and reliable fraud prevention and detection system in place, that isn’t going to detract from the customer experience, is the only way to effectively fight fraud in today’s digital world.