The digital revolution has transformed the way we live, work, and interact with each other. The increasing pervasiveness of digital connectivity has enabled us to connect with people, and access information from anywhere in the world, at any time. As a result, quick and seamless digital experiences have become the new standard for consumers, with digital connectivity playing a central role in our daily lives.
The digital revolution is here to stay; it is being driven by several interconnected factors, including a changing regulatory landscape and the emergence of new technologies. Governments and regulatory bodies are taking steps to better understand and regulate the digital landscape, and to protect consumers from the potential risks posed by digital technologies. Furthermore, new technologies are constantly being developed, offering new and innovative ways to interact with digital information and services.
These factors combined have bolstered the ever-increasing connectivity between organisations and consumers. This has brought about a wealth of new opportunities and benefits for cross-border activities.
While the digital revolution has led to many benefits, it has also created new opportunities for financial crime, including online and identity fraud. A recent survey by Experian found that 25% of consumers in the Asia-Pacific (APAC) region have fallen victim to online fraud, with consumers being most vulnerable on social media sites and apps.
To better protect themselves against financial crime and identity fraud, individuals and organisations will need to rely on digital identity verification solutions.
The changing landscape and evolving tactics of fraud
As technology continues to advance, criminals also continue to exploit the ever-expanding capabilities of emerging technology, using it to steal personal information, defraud individuals and organisations, and carry out other illegal activities. When the COVID-19 pandemic forced brick-and-mortar businesses to rapidly adopt digital technologies, fraudsters adapted their processes to do the same. Fraud is now occurring constantly and consistently, making it impossible to predict when it will happen.
Furthermore, the rise of hyperconnectivity has created new opportunities for fraudsters, posing evolving and complex risks for organisations. As a result, businesses must remain constantly vigilant, implementing defences that protect their operations and customers around the clock and across the globe.
Brute force tactics and the challenge in mitigating synthetic fraud
One of the biggest trends seen across 2022 was the increase in drastically scalable, low-effort, less sophisticated fraud, rising to 72.9% of all document fraud. This type of fraud generally focuses on simple document errors that are simple to spot, but difficult to prevent, as fraudsters can take advantage of companies’ security features that allow them to attack en masse. These low-effort tactics serve as distractions from more sophisticated fraud attempts, and include techniques such as repeated attacks, forgeries of documents, and low-effort biometric fraud, such as making thousands of copies of the same document with only minor tweaks to gain access.
When combined with synthetic fraud — where fraudsters combine real and fabricated personal information to create fictitious identities — organisations have a challenging task in keeping their business secure. Synthetic fraud is particularly difficult to detect, as it relies on real information to forge new identities. It is estimated that synthetic fraud accounts for up to 85% of all fraud.
Biometrics verification is the future of security
Today, companies cannot rely on simple, knowledge-based authentication methods alone to protect themselves against the growing threat of fraud. Fraudsters have adapted to the evolution and innovation of digital connectivity, finding new ways to bypass traditional security measures. As a result, it is becoming increasingly difficult for businesses to safeguard themselves and their customers.
However, companies that adopt biometric data verification as a security measure have been more successful in deterring fraudsters. Out of the hundreds of thousands of attacks that businesses faced in 2022, fewer than 1.5% were attempted biometric fraud, in which fraudsters attempted to gain access to a system by falsifying biometric data as they do not currently have the means to bypass this type of security.
Biometrics provide a higher bar for fraudsters to bypass, as this type of verification is based on unique physical characteristics — fingerprints or facial recognition, for example — making it virtually impossible to circumvent. By using biometric data verification, companies can provide a higher level of security for themselves and their customers.
Strategies for effective fraud prevention
To better reduce the risk of fraud, one of the key best practices for organisations is to make onboarding a business stronghold. The onboarding process is often the first point of contact between a business and its customers, and it is where fraudsters will try to slip through the cracks. By implementing strong fraud detection measures at this stage, businesses can identify and prevent potential fraud before it can become a problem.
Another best practice is to adopt a layered approach to fraud prevention. This involves applying various methods of detecting and preventing fraud, and tailoring solutions based on the specific needs of the business. For example, a business might use a combination of biometric data verification, knowledge-based authentication, and transaction monitoring to provide a comprehensive and effective fraud prevention strategy.
Finally, businesses should consider using software development kits (SDKs) over APIs when implementing fraud prevention measures. SDKs provide easier and more flexible integration, more consistent image quality, a more accessible user experience, and greater fraud deterrence. They also allow businesses to develop customised solutions that are tailored to their specific needs, making them a more effective way to prevent fraud.
Digital identity solutions deliver diverse benefits
Moving forward, businesses must stay ahead of the game in their efforts to prevent fraud. Fraudsters are taking a more sophisticated, holistic approach to their attacks, and traditional security measures are no longer enough. By adopting a holistic approach to security and utilising digital identity verification solutions, businesses can effectively fight back against fraud and protect their customers and their own interests.