RETAIL BANKING | Staff Reporter, Singapore

40% of APAC banks to focus on fighting application fraud in 2018

60% experience fraud using synthetic identities.

With the availability of personal data online via mobile apps and social media to criminals to try and apply for credit cards fraudulently, dealing with application fraud became the key priority for four in ten APAC banks in 2018, according to a recent survey by data analytics company FICO.

FICO’s survey also found that 44% of APAC banks believe that social platforms and mobile apps are the most likely to suffer a data breach, and that 60% are experiencing application fraud using synthetic identities. Furthermore, one in five banks say that the number of fraudulent applications for credit cards now sits between five to 10 percent of all applications.

Here's more from FICO:

The survey also reveals that half of banking respondents reported an increase of 25-50 percent in card testing. This is an activity where criminals test the fraud rules of the banks to check what limits and which purchase categories will result in the blocking of a card rather than an approval. A further quarter of respondents said it was even higher at 50-100 percent. This growth demonstrates the increasing sophistication of organized fraud rings.

One of the new analytic techniques that is gaining favour as the fraud environment shifts to data breaches and identity theft, is identifying the common point of purchase for compromised cards. This is achieved by using analytics to link transactions that were later determined to be fraudulent. By identifying the common places where comprised cards were previously used, banks can identify the source of leaked card information. Around half of the banks surveyed currently have such a solution in place, but FICO expects this will grow next year.

When asked about the key obstacles to tackling more fraud, four in ten banks said the key reason was a lack of budget. The second most popular reason was that the fraud department was dealing with too many false positives.

FICO surveyed 37 executives from financial institutions across the region.

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