FICO’s latest global consumer fraud survey has revealed that 2 in 5 Filipino consumers say good fraud and scam protection is their top consideration when looking to select a new financial account. A further 1 in 4 say it is the second most important consideration. This comes at a point, post-pandemic, where most consumers say they will continue to do all their banking digitally and are becoming increasingly aware of the need for strong protection against online scams.
“With around 57 million banking customers in the Philippines, if 40 percent of consumers are filtering financial providers to find those with the strongest fraud protection, that’s a market of more than 23 million,” said CK Leo, FICO’s lead for fraud, security and financial crime in Asia Pacific. “This is a significant opportunity and shows that good fraud protection can be a bank’s biggest sales asset rather than just an overhead.”
Filipinos Wary of Identity Theft and Other Scams
According to the survey, 4.5 percent of adult Filipinos (equivalent to 5 million) know they’ve been a victim of identity theft. An additional 6 percent (extrapolating to around 6.7 million Filipinos) think it is likely that their identity has been used to open an account fraudulently. These numbers demonstrate an increasing awareness of scams around identity theft.
At the same time, those surveyed said they are also aware of more frequent fraud checks conducted by banks to try and protect them against identity theft, account takeover and card fraud. 61 percent said that identity checks have increased when making online purchases and 56 percent have experienced more identity checks when they log into accounts.
Filipinos are also increasingly wary of scams where fraudsters trick consumers into sending them money, known as Authorized Push Payment (APP) fraud.
“APP fraud is becoming a bigger problem in the Philippines as we see a boom in the use of real-time payments,” said Leo. “Fraudsters are attracted to these scams as the victims bypass checks by authorizing the payments themselves, with the funds clearing instantly and laundered through a maze of accounts.
“Protecting real-time payments requires analytics that look for changes in customer behavior such as using accounts or devices outside of their usual habits, as well as standard anomalies such as time-of-day or frequency of a transfer. FICO has found that the use of targeted profiling of customer behavior to spot scams has yielded some impressive results with 50 percent more scam transactions detected.”
Balancing Strong Fraud Protection with Convenience
When it comes to convenience, Filipinos say that identity checks that are too difficult or time-consuming have stopped them from opening a range of different accounts. 27 percent of customers have given up on opening a savings account, 27 percent on a credit card and 32 percent on a personal loan.
Further to this, 25 percent of Filipinos say difficult or time-consuming identity checks mean they have reduced their use or stopped using their bank account and 28 percent have stopped or reduced use of a credit card.
“As new scams and frauds emerge, banks are increasingly challenged with balancing customer experience needs against managing fraud risks and controls such as securing payment verification,” explained Leo. “Implementing effective account security technologies that reduce friction is therefore a priority.”
Perception of Security is Everything
The survey also demonstrated there is a correlation between the perceived effectiveness of a security method and people’s preference for using it.
Biometric security was favored and polled as the most secure, with fingerprints in top place on 65 percent and face scans on 60 percent.
Despite this, many consumers have established habits and a reluctance to move on from traditional, less secure methods. 41 percent of Filipinos still show a strong preference to use old-fashioned usernames and passwords while 47 percent like to receive passcodes sent via SMS.
“People develop a sense of trust and comfort around a way of doing things, especially if it has protected them from scams so far,” said Leo. “As a result, it takes a while for customers to develop confidence in new security methods even if they are better. Banks need to remain flexible but find ways to show new channels are trustworthy, effective and more convenient.”
The survey was conducted in August 2022 by an independent research company adhering to research industry standards. Approximately 1,000 Filipinos were surveyed, along with 13,000 consumers in Brazil, Canada, Chile, Colombia, Germany, Indonesia, Mexico, South Africa, Thailand, Peru, the Philippines, Sweden, the U.K. and the U.S.