Financial Institutions In Asia Pacific No Longer Choose To Build Their Own Financial Crime Management Solutions

Dev Dhiman, Managing Director, APAC at GBG. (Photo: Dok. GBG)

JAKARTA - GBG, a global digital identity technology company that helps companies prevent fraud and meet compliance requirements, announced the publication of the IDC InfoBrief study "Build, Buy or Rent: Evaluating Effective Strategies to Combat Rising Financial Crime and Fraud in Asia/Pacific ".

Financial institutions (FIs) across Asia-Pacific continue to adapt their financial crime management strategies and investments, including taking full ownership and building internal systems, purchasing solutions, or leveraging services managed by solutions providers.

Infobrief IDC in collaboration with GBG, was developed as a consultative guide to assist financial institutions in conducting due diligence in considering critical parameters and making decisions regarding next generation anti-fraud solutions.

GBG commissioned IDC to conduct market research entitled "Next-Gen Financial Crime Management: APAC Finance, Banking, and Ecommerce" involving more than 800 respondents in 8 key markets in Asia-Pacific including Singapore, Malaysia, Indonesia, Vietnam, Thailand, Hong Kong , Australia and the Philippines.

This study found that one in four (26 percent) FIs in Asia-Pacific currently use a self-made fraud origination/application management system. However, the trend to build internal anti-fraud solutions is expected to decrease, as only 21 percent of respondents chose the strategy of building their own next-generation fraud origination system.

In Indonesia, this downward trend in building your own internal solutions is even more apparent. At least 25 percent of FIs in Indonesia currently use a self-developed fraud origination/application management system, however, only 15 percent of FIs in Indonesia have opted for the strategy of building their own next generation fraud origination management system, representing a decrease of 10 percent, compared to 5 percent in the Asia-Pacific region. Pacific.

This downward trend in the tendency to build their own solutions is also seen for next-generation transaction fraud systems, upstream to downstream financial crime management platforms, anti-money laundering (AML) or compliance solutions, Know Your Customer (KYC) or identity verification solutions, machine learning/AI. , as well as orchestration solutions.

Dev Dhiman, Managing Director, APAC at GBG explained that building, buying or leasing is a dilemma that has always been faced by startups and established financial institutions. This problem is becoming increasingly prominent due to the pandemic that accelerates digitization and changes the fraud risk management process.

"We are now in an era of smart technology and hyperconnectivity, so the complexity and sophistication of fraud and financial crime is also increasing. As access to new technology becomes easier and time spent on mobile devices increases, fraudsters can take advantage of new and innovative tactics that can endanger consumers and various institutions," said Dev, in a written statement, quoted Monday, November 8.

"Financial institutions need to consider their financial crime management investment strategies more carefully. Basically, there needs to be a more sustainable approach in terms of IT resources, rapid scalability to grow new channels and business models, able to manage the complexities of today's fraud typologies. and the future, and balanced in order to provide a better customer experience," continued Dhiman.

Among FIs in Asia-Pacific that have built their own solutions, 85 percent report that they will replace the systems they have built within three years and one in four companies exhibit a replacement cycle every 12 months.

In Indonesia, there are more FIs that will replace their internal systems in the short term, with 86 percent of FIs surveyed planning to replace the solutions they have built within three years. Meanwhile, one in three FIs will replace their system every 12 months.

Financial crime solutions typically take about three months to establish a fraud detection and prevention rhythm after the implementation phase is complete. Organizations will typically continue to expand fraud prevention to more services or channels and optimize the effectiveness of fraud detection accuracy and minimize customer friction.

For systems that leverage machine learning, it will take time to retrain new fraud detection typology models. Repeatedly setting the core system will create gaps that make fraud management less effective.

GBG has been recognized as one of the top 100 financial technology providers in the world by IDC Financial Insights, Enterprise Fraud Category Leader in the Chartis RiskTech Quadrant 2021, and Best Machine Learning/AI Innovation of the Year by this year's Asia Risk Awards.