APAC institutions scramble to block fraud with biometric ID verification

Identity verification is posing headaches for many people and institutions carrying out financial transactions in Asia. The ID checks intended to protect against frequent fraud attacks risk imposing too much friction for users, as seen in a FICO survey, though biometric authentication is providing glimmers of hope for the banking and ecommerce sectors.

This is the context behind the recent fundraise by Wise AI, a new milestone announced by Liquid, and a new partnership agreement by VinCSS and WebComm.

A regional challenge

A FICO survey shows the difficulty of finding a balance between ease of onboarding and fraud protection in Asia. Similar challenges for KYC and identity verification processes can also be seen in the region.

Asia-Pacific (APAC) customers will put up with only so many questions during account opening, or persist for so long.

Nearly half of consumers in countries including Indonesia and Malaysia have noticed more digital identity checks when logging into bank accounts or making online purchases over the past year, according to FICO. Identity theft is a growing problem in the Indonesia, but as identity checks become more time-consuming, people are less likely to complete them.

One in three Indonesians say they will abandon an application for a bank account or credit card if it takes more than 10 minutes. An even higher percentage of people have abandoned attempts to open personal bank accounts in Malaysia and India, however, FICO’s Consumer Survey 2023 shows.

Biometrics may be part of the answer, with 51 percent of those surveyed across India, the Philippines, Malaysia, Thailand, Singapore and Indonesia saying they are in favor of using their fingerprints for authentication. Almost as many are in favor of using face biometrics (47 percent), and only slightly fewer say they are happy to use iris biometrics (40 percent). Twenty-eight percent say they are happy to use behavioral biometrics.

Digital wallets may also be part of the IDV process innovation needed to overcome the barriers to financial transactions. Euromonitor International Regional Market Insight Manager David Zhang telling Asian Banking & Finance that 61 percent of global ecommerce payments will be made with digital wallets by 2027.

Thailand’s digital wallet

Thailand’s national digital wallet scheme is drawing criticism from industry insiders, The Nation reports. Pay Solutions CEO Pawoot Pongvitayapanu says the development of a payment platform may take longer than the October implementation target allows.

“The registration system alone, which involves connecting with the Ministry of Home Affairs for identity verification, is a massive undertaking. Coupled with the development of the payment platform and the integration of multiple systems, the challenges are immense,” former Krungthai Bank adviser Somkid Jiranuntarat said, echoing Pongvitayapanu’s point.

The Thai government is planning to disburse 450 billion baht (US$12.6 billion) through the digital wallet scheme. The Bank of Thailand has also expressed concern about the digital wallet’s payment system.

Biometrics advance steadily in Vietnam

Vietnam introduced mandatory face biometrics checks for account opening and transactions above a certain threshold at the beginning of July. In less than a month since then, 26.3 million people have completed biometric authentication, VnEconomy reports. The system verified 13 million identities within the first couple of days of launching, and is carrying out about 1.9 million authentications per day, covering 8.2 percent of all transactions.

The rate of biometric registrations among bank customers remains low in the country, however, according to Viet Nam News. Only two banks have biometric registration rates above 20 percent. Four more have registered between 10 and 20 percent of their customers, and the rest are below 1 in 10.

The report recounts some Vietnamese people saying that they do not see a need to register, as their normal transactions are below the threshold, and others said they had tried to register but without success. One customer was told by his bank that his difficulty registering his biometrics is due to the newness of his ID card.

The VNeID app, which is part of the country’s Project 06, has been implemented by 22 credit institutions and 13 payment intermediaries in Vietnam.

Against this background, VinCSS and WebComm have formed a partnership to enhance cybersecurity in the financial sector and other industries of Taiwan and Vietnam with FIDO authentication.

The partners plan to bring together WebComm’s zero trust solution and VinCSS’s IoT FDO (FIDO Device Onboarding) solutions for the Taiwanese market. VinCSS will promote WebComm’s FIDO digital identity software and OETH Cloud Identity in Vietnam as a compliment to its own technologies.

IDV providers to the rescue?

Malaysia-based Wise AI just raised $10 million to target what it sees as a KYC gap in Southeast Asia. The FICO survey shows almost 40 percent of Malaysians have abandoned bank account applications, and almost as many have left credit card applications incomplete.

Liquid has performed 50 million online identity verifications with its eKYC service in Japan. The service uses photographs of ID documents or IC chip scans with selfie biometrics. The IC chip scans often use JPKI, the country’s national personal authentication service. The newer IC chip and JPKI method is up to 10 million identity verifications.

The total of ID verifications is a leap of over 20 million from a year ago, and 10 million from February.

The KYC service from Liquid has also had three years of uninterrupted uptime, and has led Japan in market share for five consecutive years, according to the announcement.

Article Topics

biometrics  |  identity verification  |  Indonesia  |  KYC  |  Liquid Inc  |  Malaysia  |  selfie biometrics  |  Southeast Asia  |  Thailand  |  Vietnam  |  VinCSS  |  Wise AI