As new types of digital commerce and novel payment methods have proliferated and digital finance has become the norm in APAC, transaction fraud has become significantly more frequent and sophisticated. The COVID-19 pandemic has further increased this risk as fraudsters take advantage of a rich variety of digital channels. The post-pandemic economic downturn also increased first-party risks such as the increase in authorized push-payment fraud and friendly fraud incidents in the region. Forrester sees the following key fraud management market dynamics:
- Main trend: New types of fraud types are emerging rapidly. The APAC market has a rich variety of digital channels and alternative digital payment methods of which fraudsters can take advantage. Driven by the high penetration of real-time digital payment networks in the region, customer-authorized push-payment fraud has increased significantly. The economic downturn in 2022 also increased first-party risks, as people who found themselves unemployed became involved in policy abuse fraud and friendly fraud — some even had to cede their financial accounts and personal identities to fraudsters to make money.
- Primary challenge: balancing effective fraud management with customer experience. The economic downturn driven by high inflation, the war in Ukraine, and global supply chain disruption has made most organizations revenue- and cost-sensitive. While financial institutions and retailers need to use an effective enterprise fraud management (EFM) solution to avoid significant fraud losses, they can’t afford to create additional friction in the customer journey that would scare people away, further eroding revenue. An EFM solution that strikes the right balance will gain more traction.
- Top disruptor: Emerging technologies are the game-changer for fraud management. Traditional rules-based models are costly to maintain and ineffective against new types of fraud. AI algorithms including supervised learning, unsupervised learning, deep learning, and graph computing have become the norm in fraud management. Privacy-preserving technologies such as homomorphic encryption and federated learning can also bring richer data insights to fraud analysis by breaking down data silos across divisions and organizations and enabling efficient data sharing.
Facing the rapidly changing market environments and increased fraud threats, EFM solutions are more in demand than ever. Forrester defines enterprise fraud management as:
A solution that integrates data from multiple payment and nonpayment transaction processing systems, online portals, and threat information sources and provides transaction monitoring, risk scoring, case management, and reporting for online and offline payment and nonpayment transactions.
Companies, particularly financial institutions and retailers, are seeking more efficient, automated, and intelligent fraud management solutions that can help them avoid significant revenue loss, improve customer experiences, and guarantee a smooth transition to digital business.
In our recent report, The Enterprise Fraud Management Landscape In Asia Pacific, Q1 2023, Andras Cser and I identified 24 EFM vendors in APAC with relevant revenues. Security, risk, and fraud management professionals should use this report to understand the value they can expect from an EFM vendor in APAC, learn how vendors differ, and select one based on size and market focus.
To learn more details about EFM vendors in APAC, Forrester clients can read the full report or schedule a guidance or inquiry session.