FICO (NYSE: FICO):

Highlights

• 1 in 6 Indian consumers will leave for a competitor if unsatisfied with their bank’s fraud management response
• 15 percent of Indians concerned about Authorized Push Payment scams
• 11 percent of Indian consumers think banks could do more to protect them

FICO’s latest global fraud survey has revealed that 1 in 6 Indian consumers will leave for a competitor if unsatisfied with their bank’s fraud management response. This comes at a point, post-pandemic, where 4 in 5 consumers say they will continue to do all their banking online in an environment where India reported the highest fraud rate in the global survey of a dozen countries.

With India boasting 670 million banking customers, this 1 in 6 Indian consumers still represents churn of up to 107 million people which delivers an opportunity for institutions that can best manage the problem.

More information:https://www.fico.com/de/latest-thinking/ebook/fico-consumer-fraud-survey-2021-india

Indians Most Concerned Globally About Authorized Push Payment Scams

The survey of a dozen countries revealed that Indian consumers were the most awake to the threat of Authorized Push Payment (APP) fraud, a scam where a fraudster tricks a target into sending them money. Fifteen percent of Indians said it was the type of fraud that concerned them the most. This was much higher than the U.S. (5%), the UK (6%), Indonesia (10%) and Thailand (9%).

“APP fraud is becoming a bigger problem in India as we see a boom in the use of real-time payments,” said C K Leo, FICO’s lead for fraud, security and financial crime in Asia Pacific. “Fraudsters are attracted to these systems as they clear funds instantly, allowing them to deceive victims and then launder the funds 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.”

With 78 percent of Indian consumers saying they plan to use real-time payments in the year ahead, Indian banks that lead in real-time payment fraud prevention will have a significant advantage over the competition.

Balancing Strong Fraud Protection with Convenience

In India, 66 percent of survey respondents say they have reported actual or suspected fraud or scams to their banks, which was the highest rate globally. Despite this, most customers in India (87 percent) say their banks do enough to keep their money safe. Just 11 percent think banks could do more, but this still equates to a potential 74 million customers.

When it comes to convenience, 41 percent of customers in India are most irritated by declined transaction alerts for fraud that are late or never arrive. A further quarter (26%) of customers dislike banks changing the methods used to authenticate customers.

“The uptick in adoption of digital payment modes not only expands the fraud attack surface but makes for a more complex set of customer experience concerns,” explains Leo. “These pit the need for superior fraud management against the desire for easier customer communication, authentication, and verification preferences.”

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.

When it comes to payment verification, 42 percent of customers prefer text messages, despite security risks such as SIM swap scams, while just 19 percent prefer to use their bank’s app.

The group that stands out is the 15 percent who prefer a phone call. In the coming year, 83 percent of this cohort plans to use real-time payments, demonstrating their willingness to adopt new banking technologies. This means that their desire for phone verifications is a security related preference and not a reluctance to move on from traditional communications channels.

“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 September 2021 by an independent research company adhering to research industry standards. 1,000 Indian adults were surveyed, along with 12,028 consumers in Brazil, Canada, Chile, Colombia, Germany, Indonesia, Mexico, South Africa, Thailand, U.K. and U.S.

About FICO

FICO (NYSE: FICO) powers decisions that help people and businesses around the world prosper. Founded in 1956, the company is a pioneer in the use of predictive analytics and data science to improve operational decisions. FICO holds more than 205 US and foreign patents on technologies that increase profitability, customer satisfaction and growth for businesses in financial services, telecommunications, health care, retail and many other industries. Using FICO solutions, businesses in more than 120 countries do everything from protecting 2.6 billion payment cards from fraud, to helping people get credit, to ensuring that millions of airplanes and rental cars are in the right place at the right time.

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