Managing fraud amidst evolving consumer behaviour in the new-normal

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Leonard Chong

By Leonard Chong, VP of Business Development, APJ

COVID-19 has conclusively altered consumer behaviour, and organisations would have to pivot their business models to accommodate what’s new and next. As countries ease their lockdown restrictions, organisations will be confronted by heightened customer expectations and the need to make consumers feel safe. There is a greater shift towards digitalisation as consumers have adapted to the new-normal of performing their essential and leisure activities using e-commerce and contactless online services. Accompanying these changes in consumer behaviour and their increased expectations are opportunities to both increase customer acquisition and decrease customer churn.

The pandemic has changed the behavioural patterns of consumers – what they buy, when they buy and who they buy from. Consumers may shop around and display ‘erratic’ online buying behavioural patterns in their search to get the best deals for goods and services which may be in limited supply due to pandemic restrictions. Individuals may also access their online accounts and perform transactions at various times of the day away from their usual norm.  These behavioural changes and increased e-commerce and contactless online activities will create added pressure on organisations to manage various levels of fraud.

Fraud prevention mechanisms generally work on the principle that established consumer behaviour is normal and trustworthy. These mechanisms rely on transaction types, times and frequencies to establish what normal behaviour is. Any deviations or abnormal behavioural patterns may be deemed suspicious and flagged as possible fraud thus triggering additional security checks. Added measures that may inadvertently create more friction to the overall customer experience as organisations may have to deal with more new customers with varied buying behaviours. Inevitably, organisations may have to alter their fraud mechanisms that rely on behavioural analytics and risk based assessment, and supplement them with additional safeguards that do not compromise on the overall customer experience journey.


Customer experience is difficult to quantify, however, customer turnover is tangible, and customer loyalty is quickly becoming a rare thing of the past. As customers now expect frictionless and personalised experiences at any touch point, any failure to meet these expectations, may result in a customer choosing a different service provider.


Online fraud attacks have increased as people stay home and carry out more online transactions during COVID-19. Malefactors have exploited the pandemic to target new victims by preying on people’s sense of fear and uncertainty during these difficult times.

The main cybercrimes that have been perpetrated against individuals during this pandemic are Internet scams and phishing, disruptive malware, data theft and evil domains. Scamming unsuspecting victims through phishing and smishing campaigns to steal personal and banking data seem to be the modus operandi for most malefactors, leading to a rise in third-party identity fraud. With stolen credentials, these fraudsters are able to impersonate the identities of victims to gain access to their accounts using their personally identifiable information (PII) in account takeover (ATO) fraud. Via the compromised account, a fraudster is able to perform fraudulent transactions and fund transfers. ATO is a very lucrative business for cybercriminals and poses a huge threat to online banking services and e-commerce. ATO attacks can cause huge reputational damage to an established brand, and undermine the trust and confidence of customers.


A majority of Internet usage is now performed on our mobile device, and we use it for practically everything today. Since, our mobile is very much part of our lives, it would be ideal to use it as a secure and frictionless transaction authentication and confirmation tool to complement existing fraud mechanisms.


Customers are now reducing face-to-face contact and want the ability to perform all types of financial transactions regardless of time and location. Correctly identifying customers and their identity is the paramount responsibility of businesses in mitigating financial risk, and Electronic Know Your Customer (eKYC) should be used for customer onboarding, identity verification and ongoing user authentication. eKYC provides a more robust biometric-based verification system to complement traditional anti-fraud methods such as password and 2FA solutions. The rise of “deepfakes” and identity spoofing technologies, however, represents a potential challenge to biometrics-based verification systems. Fortunately, multi-factor biometric identity verification and certified liveness detection technologies have evolved accordingly, to address the changing security needs of businesses and consumers.


The number of cybercrime attempts on online services have increased tremendously, and improving the cybersecurity of every business should be a top priority. Organisations should use managed Public Key Infrastructure (PKI) services to provide encryption for financial websites, apps, and emails. Any message sent over the Internet can benefit from PKI technology whether it is company to company, company to Government, international or domestic. PKI offers unique benefits, such as, digital signatures that create persistent, tamper resistant evidence of “who did what to whom”, which is critical to electronic transactions carrying high legal risks or compliance requirements.


Most organisations sign a lot of paper documents with their customers: agreements to open new accounts, issue loans, place deposits, investments, and other services. Expansion of services and growth in customers will lead organisations to reduce the financial and time costs of paperwork, and lower the risk of errors. Digital interaction is more convenient and accessible for customers in this new-normal, and as secure and legally effective as traditional methods such as in-person interactions at a branch office. A paperless office provides an effective solution that uses digital channels to execute and digitally sign agreements, ensuring the integrity and authorship of these documents.


Consumer demand for innovative online digital services has increased greatly since the start of the pandemic. The clear winners in the digital race will be organisations that are able to be an integral part of a customer’s life. Organisations have to provide secure and frictionless platforms that allow customers to meet their daily needs, and perhaps, fulfil their important lifetime moments.


Prioritising fraud detection that provides higher levels of identity assurance can add friction to the user experience, but is nonetheless important for financial institutions and e-commerce service providers. By adopting an ongoing customer-centric mobile approach when balancing frictionless customer experience with fraud detection and prevention, businesses can optimise interactions that will result in increased customer satisfaction and wallet share, and a subsequent decrease in customer churn. What is important is the customer’s satisfaction and trust. Customer trust, after all, is the cornerstone of the digital economy.