Thriving E-commerce Means Increased Fraud Exposure
Singapore, May 16, 2018: Close to three quarters of Singaporean consumers are making online purchases, with travel, and food and beverage being the top categories. However, as consumers continue to look towards convenience, fraud exposure will likely increase - these are the findings of the Digital Consumer Insights 2018 by the world’s leading information services company Experian, co-authored with leading ICT market research and advisory firm IDC.
The Digital Consumer Insights 2018 report is based on a consumer survey across ten APAC markets including Australia, China, Hong Kong, India, Indonesia, Japan, New Zealand, Singapore, Thailand and Vietnam. It looks at how businesses fare in fraud management, through their customers’ eyes and is a complementary report to the Fraud Management Insights 2017 report which looked at fraud management through the eyes of enterprises.
The report found that there was an interplay between convenience and fraud. With the growth of convenient interaction and transaction platforms such as frictionless payments, and a continuous goal to provide better and seamless customer experiences, opportunities for fraud increases.
“Singapore’s e-commerce market is growing rapidly and is expected to hit S$7.5 billion by 2025 according to Google and Temasek Holdings,” said Dev Dhiman, Managing Director, Southeast Asia and Emerging Markets, Experian. “However, fraud rates are also high, with close to a fifth (17%) of Singaporeans having experienced fraud across various e-commerce and services segments, and more than half of our respondents intending to switch service providers when fraud occurs.”
“Unfortunately, the reality is that greater digital convenience is linked to higher fraud exposure. However we also found that greater fraud exposure may lead to consumers being more likely to adopt convenient security measures like biometrics – which will allow businesses to ensure a seamless customer experience while managing fraud.”
While the Singapore government has been pushing towards a smart nation vision and has already successfully rolled out biometric passports, comfort levels for utilising biometrics (e.g. fingerprinting, facial recognition) in commercial applications remained low. Only 11% of respondents in Singapore indicated they were willing to adopt biometrics in commercial applications, which was below the APAC average of 13% and far below countries such as India and Vietnam which stood at 21% and 18% respectively.
The Vicious Cycle of Fraud Response: Managing the Fraud Response Cycle and Negating Business Risks
The research found that mismanagement of fraud response results in two different types of losses for companies, due to differing reactions from consumers which are based on their risk attitudes and perceptions. The report identified two groups of consumers, the Digital Voyagers and the Digital Pragmatists. Digital Voyagers dominate in mobile-led, emerging economies and they are more convenience-driven and less risk-averse. On the other end of the spectrum are Digital Pragmatists who tend to come from mature economies and are more cautious and concerned about security.
“Understanding the difference between Digital Voyagers and Digital Pragmatists is important for companies as they react differently to fraud,” said Dhiman. “In Digital Pragmatist centric countries like Singapore, people are more likely to avoid digital transactions for fear of fraud and this results in a loss of digital revenue for businesses. In the case of Digital Voyager centric countries, like Thailand or Vietnam, companies may face escalating fraud costs as digital consumption continues and companies absorb fraud losses to retain customers.”
Consumers’ Willingness to Share Data
One of the ways companies can help protect against fraud is to have high quality information about their consumers so that they are able to properly verify transactions. When asked, 36% of Singaporeans were willing to have their personal data shared with businesses specifically for better fraud detection.
Consumers are also selective in the information they share with companies, with 6% of Singaporeans saying that they have provided inaccurate information to avoid disclosing personal data. Around 1 in 10 Singaporeans were also likely to supply inaccurate information to companies, with 14% having made mistakes in basic personal details like addresses, phone numbers and names, 10% having made mistakes in providing highly guarded personal information like payment details, and 11% having given wrong information relating to their age, gender, income and education level.
“Across the region, we found that there is a trust gap between people and organisations,” said Dhiman. “Consumers are submitting inaccurate data or purposely omitting important information to companies. This, unfortunately, results in it being more difficult for businesses to identify their customers online and fight fraud effectively. With the acceleration of the digital economy, fraud challenges will only grow and companies must ensure they leverage the right technologies and solutions to address the complexities of the digital age.”
Findings of Singapore Consumer Behaviours and Attitude
|Japan, New Zealand, Australia, Hong Kong, Singapore are Digital Pragmatist Centric Countries – where consumers have higher risk perceptions and feel security is more important than convenience||Thailand, Indonesia, China, India, Vietnam are Digital Voyagers Centric Countries – where consumers are less risk averse and less guarded in sharing their data||Singaporean Consumer Behaviour Examples|
Fraud is not acceptable
Higher tendency to switch providers in event of fraud
|Lower tendency to switch providers in event of fraud||
Singapore had the highest direct fraud exposure in the region amongst matured economies.
53% of Singaporean consumers will switch service providers when fraud occurs and 83% believe that fraud is unacceptable.
Lower willingness to share data to get better experience
More accurate / Higher quality of submitted data
Higher willingness to share data to get better experience
Lower quality of submitted data
36% of Singaporeans are willing to share data for fraud detection (43% APAC average) and 27% are willing to do so for better customer experience (33% APAC average).
A fifth of Singaporeans (21%) are concerned about supplying personal data in a high-risk environment like a public Wi-Fi network.
They are the third most concerned country in the region, with only Indians and Australians being more concerned at 23% and 22% respectively.
Notably the study found only a weak link between consumers being selective and guarded with their data, and with fraud, indicating businesses should not depend on consumer actions alone to reduce fraud.
Lower consumption of digital services
Lower adoption of mobile payment
Higher consumption of digital services
Higher adoption of mobile payment
Singaporeans were willing to pay up to SGD172 per mobile or contactless payment transaction, which when viewed as percentage of monthly income meant they are the least willing to make purchases through such channels.
They have the lowest percentage of mobile spend limit as a percentage of monthly income, at just 2.8% along with Japan. In comparison Vietnam was the highest at 51.4% and the APAC average was 19%.
To download Digital Consumer Insights 2018, please visit: /insights/digital-consumer-insights-2018
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