All posts by Dan McConaghy

Fraud & Security APAC Banks Take A Cautious Approach To Stopping Fraud

Stopping Fraud

Almost three in four banks in Asia Pacific anticipate that fraud in their country will increase in 2019, according to a recent poll by FICO. Of specific concern are transactions completed when neither the card nor the cardholder is physically present (card-not-present or CNP fraud), as well as cards taken out by criminals under false identities (application fraud). These were identified as the two key concerns, as well as the biggest challenges to stopping fraud in 2019. “The volume and velocity of transactions is growing in Asia,” said Dan McConaghy, president of FICO in Asia Pacific. “Over 50 percent of global online retail sales in 2018 originated from the region. This growth in ecommerce along with the efforts of banks to digitize more services has seen a change in fraud risk. Dealing with an ocean of transactions means that AI and machine learning are essential when it comes to detecting... [Read More]

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Fraud & Security APAC Banks Say Fraudulent Synthetic Identities on the Rise

Woman with false face

Synthetic identities fraud is where new identities are made by blending elements from multiple individuals, making the uncovering of fraudulent transactions more complicated. Scammers take these new identities and apply for accounts to build validity for these new personas. Products such as pre-paid credit cards, utility bills and personal loans have all been used as a starting point to build credibility and credit-worthiness in a process that can take the criminal many months, sometimes years. At our recent annual FICO Asia Pacific Fraud Forum held in Bangkok, Thailand in October 2017, we surveyed 37 executives from financial institutions across the region.  Six in ten banks in Asia Pacific said that they are experiencing application fraud using synthetic identities and a further one in five banks told us that their fraudulent applications for credit cards now sits between five to 10 percent of all applications. Clearly, identity fraud was a growing problem... [Read More]

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Risk & Compliance Do ‘Digital-Only Banks’ Have a Future in Asia?


Imagine a scenario where banks offer their services digitally; not as an ad hoc feature but as a fully integrated mobile experience. A digital-only bank that allows customers to do everything on their smartphones, from opening a new account to making payments, settling credit card bills to resolving disputes, all without having to go to a physical branch. If this vision sounds premature, then perhaps it’s time to update your view of what’s happening worldwide. This was the bold proposition offered by McKinsey & Company’s Sonia Barquin who presented at FICO’s Asia Pacific Chief Risk Officer Forum held this week in Thailand. Banks worldwide are fighting back against fintech start-ups looking to cut their lunch with low-cost banking offerings. Barquin pointed out that some global banks are developing digital-only offshoots while others are bringing the philosophy and business model to their main bank offering. Sonia encouraged the participants to be... [Read More]

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Collections & Recovery FICO Survey: APAC Consumers Taking Longer To Pay Bills


It’s Christmas time again and apart from the jingling of bells it’s also a time for the juggling of bills. And apparently, that’s getting harder than ever in Asia Pacific. That was the firm message we got from our Asia Pacific collections managers when we polled them about what had been happening with their customer base over 2016. Three in five respondents from banks, telcos, and utilities revealed that their customers have taken longer time to pay their bills in the past year. The 60-days past-due segment has seen the highest growth according to 41 percent of respondents. 72 percent of collections managers also registered an increase in the number of first-time delinquents. This is in keeping with figures out earlier this year from Moody’s that reported household debt in Asia has grown at an average of 13.5 percent a year. Our survey, conducted last month at our FutureCollect event... [Read More]

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Fraud & Security APAC Banks Say 2016 Brings “Monkey Business” – Data Breaches

Year of the Monkey image

In two weeks, the Chinese New Year brings us the Year of the Monkey. Why is this important? Well, according to Chinese Five Elements Horoscopes, Monkey contains metal and water. Metal is connected to gold. Water is connected to wisdom and danger. Therefore, we will deal with more risky financial events in 2016. As if to prove this point, at last month’s FICO Fraud Forum, every single attendee said they thought harm would come in the form of data breaches in other industries this year. 38 percent of respondents from 18 leading APAC banks ranked large retailers as being at the greatest risk for a data breach, with another 35 percent of respondents choosing telecommunications companies. Just like the monkey, criminals are smart, naughty, wily and vigilant animals. So, banks in the region are keenly aware of the threat posed by the increasingly connected business landscape. FSI card portfolios are... [Read More]

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Collections & Recovery Customer-Centric Collections: Q&A with Japanese Firm Aiful


I recently sat down with Shinichiro Okuyama, executive officer at Aiful (one of Japan’s largest consumer finance companies), to talk about its new customer-centric approach to collection automation and how it supports the business. Q: First, can you tell me about Aiful’s business in Japan? Okuyama-san: We were founded in 1967 and are headquartered in Kyoto, Japan. The company has grown to become the third-largest consumer finance company in Japan. Today, the Aiful Corporation operates more than 800 branches and a network of subsidiaries that specialize in consumer credit, small business loans, venture capital, loan servicing and credit guarantees. Q: Why did you decide to use FICO® Customer Communication Services? Okuyama-san: We wanted to cut costs, enhance the customer experience, meet collection targets (called cure rates), and find a way to free call-center agents from low-level collections activity so they could make more valuable contributions to the organization. We turned to... [Read More]

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Fraud & Security Asia’s Love of E-Shopping Draws Unhealthy Suitors — Criminals


Consumers in China, Indonesia and South-East Asia are creating a boom in online shopping and ecommerce transactions. A rising middle class, improved internet and logistics and wide-scale uptake of credit cards are driving this trend, with Asia Pacific set to overtake North America as the largest e-commerce market in the world. Research firm eMarketer estimates that B2C e-commerce sales in APAC this year will reach US$525.2 billion, versus US$482.6 billion in North America. This honeypot has attracted organized crime. Criminals have been victimizing consumers who are new to ideas Westerners take for granted, such as protecting their credit card details, and regional banks that have not updated their security networks. In Asia Pacific, we estimate that fraud losses have reached US$420 million per year and are on the increase at a rate of 20-25% per annum. Increasing agility, leveraging analytics, avoiding data breaches and enacting customer centricity are key in... [Read More]

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Customer Engagement Westpac Daily Credit Card Scores Improve View of Customer Risk

Credit Card Scores

Beauty really does lie in the detail. We have all gazed at the splendor a professional high-resolution image and understood, after snapping away for years on a compact camera or phone, that there is richness in more information. Higher resolution means seeing details you haven’t been able to see before. Credit Card Scores: Delivering Greater Resolution This is exactly what Westpac Banking was aiming for when it looked to FICO to introduce a daily transaction score. Westpac was looking to improve its ‘financial resolution’ by assessing its customer risk and attrition every day, instead of the industry standard of every 30 days. FICO® Transaction Scores are based on a customer’s card usage patterns and updated with every transaction authorization, yielding a more precise and current assessment of customer risk and purchase behavior that can be used to target cardholder decisions. Credit Card Scores: Increased Revenue, Reduced Bad Debts The impact... [Read More]

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Risk & Compliance What’s Keeping APAC CROs Up at Night?


Profit, risk and tailored customer solutions. These were the main themes debated at last month’s APAC chief risk officer (CRO) forum in Bali. This year I was joined by 28 of the region’s leading CROs, for what is, in my opinion, the most engaging event on our Asia Pacific calendar. This year was our fourth annual forum and the theme was “Managing Risk and Driving Profitable Growth.” Interestingly, there was a sense that priorities are shifting. Previous concern and activity over compliance and regulation is now under control and attention has moved to profitability. Competition and share-of-wallet are driving a need for technology that will provide a return on investment. At the core of many of these initiatives is the need to boost analytic capability to increase precision, optimizing decisions to manage complex business objectives. New systems must be able to access these powerful analytics in real-time, further increasing demands on critical systems that support the business. This marks a significant shift for many banks in Asia. The backroom IT...

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Risk & Compliance Debating “Big Data or Big Hype?” at the World Economic Forum


Innovation, technology and big data were hot topics this month at the World Economic Forum’s Annual Meeting of the New Champions, where over 1,500 business leaders, government officials and scholars gathered in the northern Chinese city of Dalian to discuss global challenges. I was fortunate enough to attend on behalf of FICO, and what I found most exciting was the intense interest in our type of science. Analytics and big data were seen as central to the discussion of how technology could help solve our intertwined global challenges – economic, political, societal and environmental. Indeed, I was often asked by interested attendees about how our technology can be used to predict human behaviour and allow organisations to make better decisions. I took part in a particularly engaging debate entitled: “Big Data or Big Hype?” The packed session was moderated by Vijay Vaitheeswaran, China Business and Finance Editor for The Economist. There was a lively discussion on how the widespread use of big data, telecommunications and the internet will...

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