Global technology specialist GBG has revealed that Malaysian financial institutions are facing various challenges in fraud management even as they continue to drive digital transaction growth. The finding was disclosed via GBG’s Future-Proofing Fraud Prevention in Digital Channels: Malaysia Financial Institution Study, which sees the global fraud technology provider analysing the results of its survey on 324 financial institutions in six countries within the Asia Pacific (APAC) region.
In this Malaysia-focused report, GBG found that 47% of Malaysian financial institutions considered fraud checks of new customers during the onboarding process to be the most challenging phase for fraud detection and prevention. Meanwhile, another 33% said that identity verification of new customers for account opening is the most difficult phase instead.
GBG’s report also noted that fraud of all types – including social engineering, first party fraud, cyber attacks, and anti-money laundering – are projected to increase in 2020-21. In fact, 54% of Malaysian financial institutions foresee an increase in scams, whereas 51% expect more stolen ID cases. This is in addition to already rampant incidences of fraud since the implementation of MCO, including:
- 1,001 cases of Macau scam (RM49.9 million)
- 1,582 cases of non-existent loans (RM18.3 million)
- 2,500 cases of e-commerce fraud (RM17 million)
According to GBG, this rise in fraud is attributed to the public’s tendency to share personal data online as more people are now digitally connected. The situation is further complicated by Covid-19 and the implementation of movement control order (MCO), which drove consumers to rely heavily on online and cashless transactions. This, in turn, led to more opportunities for scams and frauds.
Furthermore, GBG said that Malaysian financial institutions’ ability to manage fraud issues is not yet on par with the progressive pace of digitalisation within the country. “In most cases, the digitalisation of the product move at a much faster rate than the adoption of technology to protect and defend against cyber fraud,” said the managing director of GBG, June Lee.
The global fraud technology provider also commented that this gap in Malaysian financial institutions’ ability to manage fraud will likely grow as 30% of them plan to increase their rollout of instant banking and credit facilities. In particular, the financial institutions are looking to offer facilities such as instant bank account application, instant loans, and instant credit card application – in a bid to appeal to their customers’ preference for quick services.
That said, the situation may still yet be salvageable. According to GBG, at least 60% of financial institutions in Malaysia have approved budgets to invest in cyber fraud solutions this year. Meanwhile, 21% of them have begun establishing end-to-end fraud management platforms.
“However, the expected growth in scams would require added layers of data intelligence to assess the digital tools which are used to onboard and transact with the financial organisations, as well as to obtain a better holistic view of the intent and integrity of the individuals,” Lee cautioned. She added that being agile in harnessing new fraud prevention technology will also enable Malaysian financial institutions to stay one step of emerging fraud patterns, allowing them to gain the trust of their customers.
Established more than 30 years ago, GBG specialises in fraud and compliance, identity verification, and location data intelligence. You can find out more about GBG’s Future-Proofing Fraud Prevention in Digital Channels: Malaysia Financial Institution Study on its website.