Asia Pacific faces rising fraud threat, Forrester report warns

According to a recent report by Forrester, the Asia Pacific region faces a significant challenge in combating traditional and emerging fraud schemes. The report "Top Trends Shaping Fraud Management In Asia Pacific, 2024" underlines that the rate of fraud incidents in this region surpasses the global average, placing considerable pressure on financial institutions (FIs), merchants, and consumers.

Forrester's investigation highlights several sophisticated methods being used by fraudsters. Deepfake technologies have been noted to exploit institutional vulnerabilities, pushing traditional verification methods to their limits and posing a substantial threat. Additionally, social engineering tactics have grown increasingly complex, with fraudsters using extensive insights to deceive individuals into revealing sensitive personal information.

The diverse digital payment landscape in Asia Pacific has also been identified as a particular area of concern. Fraudsters exploit digital payment systems using various techniques, such as SIM swap fraud, QR code scams, and the creation of fake payment applications. This environment gives fraudsters ample opportunities to perpetrate scams at an alarming rate. Invoice fraud remains a significant challenge, often involving the exploitation of digital channels, particularly business emails. In some cases, employees themselves have been implicated in executing invoice fraud.

As organisations strive to counter these evolving threats, key technologies have emerged as essential tools. Forrester particularly emphasises artificial intelligence (AI) and machine learning (ML) for their potential to enhance fraud defences. "GenAI strengthens AI-based fraud model training," the report explains. Companies can simulate complex fraud scenarios using generative AI (GenAI) to better prepare their detection models for the latest fraud techniques.

Furthermore, explainable AI (XAI) is gaining traction within financial institutions. XAI offers transparency and fosters trust by ensuring that AI decisions are understandable and traceable. This transparency is crucial in building client trust and cultivating a culture of accountability in fraud management operations. Machine learning also plays a pivotal role in augmenting link analysis, providing deeper network insights for financial institutions and merchants to trace the flow of funds and detect fraudulent activities more efficiently.

In light of fraud's rising complexities and sophistication, Forrester advises organisations to explore and adopt these advanced technologies actively. The report also underscores the importance of fostering closer collaborations across internal teams and institutions, supporting data-sharing initiatives, and working alongside regulators to enhance the effectiveness and efficiency of fraud management strategies.

Forrester is a global research and advisory firm that provides insights, analysis, and guidance to help businesses thrive in a rapidly changing world. Known for its expertise in customer experience, digital transformation, and technology innovation, Forrester empowers organisations with data-driven strategies to drive growth and stay ahead of market trends.