Digital banking has given consumers greater control over their finances, making it possible to make purchases, bill payments, and transfer money between accounts with a few clicks on the computer or smartphone.
However, as more Filipinos embrace the opportunities made possible by digital banking, fraudsters are also adapting their practices in attempts to take advantage of the growing Philippine digital financial landscape—only being stopped in their tracks by fraud analytics and risk based authentication solutions, coupled with greater consumer education and awareness.
Facing off against fraud
Tackling fraud is by no means an easy task. While Philippine findings from the latest TransUnion quarterly fraud analysis show an 11 percent year-on-year decrease from Q2 2021 to Q2 2022, a deeper dive into the figures shows that fraudsters directed their attempts toward specific sectors. The logistics industry saw the biggest annual growth in suspected digital fraud attempts coming from the Philippines at 236 percent. The telecommunications industry experienced the second largest year-on-year increase in the rate of suspected digital fraud coming from the Philippines at 45 percent, while gambling placed third with a 32 percent uptick.
The possibility of falling victim to digital fraud continues to be a consideration in the daily lives of Filipino consumers. Results from the latest TransUnion Consumer Pulse Study conducted in May and June 2022 show that phishing remained the leading fraud scheme, with 42 percent of consumers having experienced a phishing attempt. Phishing is a method of identity theft that relies on individuals unwittingly divulging personal information that fraudsters could use for illegal activities.
Additional findings from the study show that 90 percent of Filipinos were concerned about sharing personal information, with 77 percent of the respondents having expressed fears over the invasion of privacy, and 70 percent afraid of identity theft.
With the prevalence of phishing schemes in the country and consumers’ concerns about the safety of their personal information, these findings show the importance of taking every possible measure to prevent and build greater trust between consumers and financial institutions.
Staying vigilant, staying ahead
One of the most promising tools in the fight against identity theft is the use of Artificial Intelligence. Banks and other financial institutions can leverage AI solutions that can be customized to seek out minor inconsistencies in customers’ banking and transaction activity to assess whether they may be fraudulent.
Alongside strengthening their backend systems against fraud, banks must also continue to educate consumers to be proactive in protecting themselves against identity theft. Utilizing different passwords for different accounts can limit the damage done in the event of fraudulent activity, for example. Multi-Factor Authentication (MFA) technology that only grants access to users after they presented two or more pieces of electronic evidence to an authenticating mechanism are also effective at limiting fraudsters’ ability to act.
However, the rise of AI solutions and other technological advancements designed to combat fraudulent practices should not be a reason for complacency in addressing fraud. While global commerce gives online retailers and marketplaces opportunities to reach customers around the world, because cross-border transactions encompass multiple countries, there can be difficulties for individual jurisdictions to monitor fraud risk.
Furthermore, data privacy and protection regulations vary across regions with fraudsters determined to find loopholes to commit cross-border transaction crimes. This means that fraud is no longer limited by geographic constraints and accessing tools to prevent it is important for business and lenders worldwide.
TruValidate™,TransUnion’s flagship identity proofing, risk-based authentication and fraud analytics solution suite, automatically leverages intelligence from billions of transactions and over 40,000 websites and apps, helping businesses and lenders discover anomalies, assess risk, and confidently identify good consumers.
Even though the rate of suspected digital fraud attempts across industries declined by 14 percent from Q2 2021 to Q2 2022, attempts at fraud are likely to continue, as fraudsters move to target different industries and consumers. Understanding where fraud comes from and what types of fraud are most prevalent can give businesses an edge in combatting it.
While businesses continue to shore up their defenses against fraudulent practices, fraudsters will continue to search for ways to exploit vulnerabilities. As more Filipinos continue to transact online in the growing digital economy, businesses must continue to keep abreast of the latest data-driven, automated fraud-fighting solutions. Coupled with continued awareness campaigns to educate the public to stay vigilant, these measures ease the friction for both businesses and consumers for transacting in an increasingly digital world.
Pia Arellano is the president and CEO of TransUnion Philippines. She has over 25 years of industry experience across banking, payment solutions, telecommunications, and remittance services. She has been instrumental in establishing TransUnion as a risk management and data solutions and insights partner of banks and financial institutions in the Philippines.