Source: Media Outreach
Headline: Study Reveals That as APAC Embraces Digital, Consumer Trust Is in Short Supply
New Digital Trust Indexreveals that the majority of service providers in APAC fail to engender highlevels of consumer trust
SINGAPORE – Media OutReach– November 13th, 2017 – According to the Digital Trust Index, part of the Fraud ManagementInsights 2017 report recently authored by Experian and leading ICT marketresearch and advisory firm IDC, the severity of fraud in Asia Pacific is highlyevident. One in five people have encountered fraud directly, while one in threepeople or their loved ones have been affected. The high levels of fraud, whichthe study anticipates will only increase as adoption of digital servicesincreases, is having a negative effect on consumer trust.
Covering ten markets across APAC, the report surveyed 3,200 consumersand over 80 organisations from the Financial Services, Telecommunications(Telcos) and Retail sectors (collectively referred to as Service Providers),each with revenues of at least US$10m. Countries surveyed include Australia,China, Hong Kong, India, Indonesia, Japan, New Zealand, Singapore, Thailand andVietnam.
The Digital Trust Index was developed to provide a meaningful way tomeasure trust between customers and organisations, across regions and sectors.The index reviews a selection of criteria across industries and countries to determinethe level of trust consumers have for digital services. It also offers asnapshot of consumer behaviour and expectations. A higher score indicates thatconsumers are satisfied with their digital transaction experience, while alower score indicates a failure in trust.
The index is based on four key variables including the levels of digitaladoption, industry preferences and fraud rates, and the effectiveness ofcompanies’ fraud management capabilities.
The study found that on average, trust in digital services is relativelylow across the region. The region on a whole only scored 3.2 out of 10.0, with Telcosholding the lowest score of 2.1 and Financial Services having the highest at 4.9.
Interestingly, while the companies surveyed indicated they are confidentin their ability to combat fraud and provide a superior customer experiencewhen fraud does occur, this did not translate to consumer perceptions.Countries like Singapore and Hong Kong, which would be expected to have a hightrust score due to their advanced fraud management systems, lag due to a lowtolerance for fraud and perceptions that companies are not managing thepost-fraud experience well. This low tolerance to fraud is mirrored in manyadvanced economies, while there is a greater acceptance of it in countrieswhere fraud incidents are the most prevalent. Retail, particularly e-commerce,tend to do better in this aspect, due to their focus on the post-fraud customerexperience and their ability to quickly address issues arising from fraud.
Digital Trust Index Score*
Based on the average of all DTI scores across the three sectors: FinancialServices, Telcos and Retail. The figures are rounded off to the nearest decimal
“Trust is an essential currency for today’s digital world and isbecoming ever more essential as digitalisation accelerates and changes the waywe work, live and play,” said Ben Elliott, Chief Executive Officer, ExperianAsia Pacific.
“As governments across the region lay down plans to increasedigitisation and enhance their economic outlooks through adopting new digitalservices, it is imperative that organisations invest to ensure trust in theirdigital offerings,” he added. “The relatively low Digital Trust Index score of 3.2out of 10 across the region indicates that there is a divide between howbusinesses think they manage fraudulent digital transactions and the actualcustomer experience when fraud does occur.”
To increase customer trust in digital services, the Digital Trust Indexidentifies three key gaps that service providers must address to strengthentrust between themselves and their customers.
Gap 1: The Rise inDigital Transactions
The sheer growth in the volume of digital transactions continues toastound business and economies across the region. For businesses, getting togrips with the increase in scale requires leveraging smart investments ininfrastructure to process these transactions, while ensuring optimal standardsof security, availability and reliability of their digital services. Thisinfrastructure includes tools to manage expanding volumes.
Across the region, companies and enterprises must utilise automation tocombat the expected increase in fraud that comes with rising digitaltransactions.
Gap 2: Race forConvenience
Elliott said, “As organisations compete to provide better and moreseamless customer experiences through digital offerings and solutions, there isan inherent trade-off between enabling a seamless customer experience and fraudmanagement. The service providers who can balance this first will emerge thewinners of their categories in time to come.”
It is critical that service providers in APAC improve their ability todeploy seamless fraud management and detection, supported by customer behaviouranalytics in the background to identify fraud in a non-disruptive way. Strikingthe balance between keeping customers safe from fraud while minimising thefriction of online transactions will be of great importance as digitalisationaccelerates across the region.
Gap 3: ConstantlyEvolving Fraud
The variety of fraud that service providers grapple with is hard to keeptrack of, much less respond to effectively. With new types of fraud emergingand evolving at a rapid pace, service providers in APAC must look towardsfuture-proofing their fraud detection capabilities to handle fraud types theyhave yet to even see.
This necessitates breaking down data silos within organisations and alsobetter utilising analytics. With the growth of data and the variety of channelsor touch points, data silos make it difficult for organisations to gain asingle view of the ecosystem and their customers. Breaking down data silos andutilising analytics will enable service providers to better understand theircustomer behaviours while also improving customer verification accuracy andspeed — leading to improved fraud detection and enhanced consumer trust.
Future-Proofing ServiceProviders Against Fraud
Online fraud and identity theft are major concerns for service providersin the region. Companies are turning to new technologies to help protectthemselves and their customers, but often not in an integrated way. Thesolution is the ‘Super ID (identity)’, the next-generation digital identitywhich is multi-factored and dynamic, bringing together artificial intelligence,biometrics and alternative data in an integrated way to effectively managefraud.
“Experian’s Hunter system was implemented by our customers in India andhelped analyse over 3 million transactions monthly,” said Mohan Jayaraman,Regional Managing Director Data Analytics and Business Intelligence, ExperianAsia Pacific. “It found that 75% of fraud events are a result of identity thefteven though India’s Aadhaar national ID system has biometrics incorporated.”
As such, businesses should consider augmenting their fraud detection andprevention capabilities with additional customer intelligence via a Super IDsystem that would help correctly identify customers in a digital transaction,allowing for greater security without additional friction to the customerexperience.
“Ultimately, while digitalisation is set tousher us into a new era of convenience, more must be done to build greatercustomer trust in the digital world — lest all our efforts come to nought,”said Sandra Ng, Group Vice President, PracticeGroup, IDC Asia/Pacific. “The next-generation fraud prevention is made possibletoday by technological advances in big data and analytics. Informationmanagement companies such as Experian use the latest data and analytical toolsto help enterprises prevent fraud and automate decision making.”
To download Fraud Management Insights2017, please visit: http://www.experian.com.sg/resources/fraud-management-insights-2017.html.
Experian is the world’sleading global information services company. During life’s big moments — frombuying a home or a car, to sending a child to college, to growing a business byconnecting with new customers — we empower consumers and our clients to managetheir data with confidence. We help individuals to take financial control andaccess financial services, businesses to make smarter decisions and thrive, lendersto lend more responsibly, and organisations to prevent identity fraud andcrime.
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