By Verghese V Joseph –
At Singapore Fintech Festival (SFF 2023), Sumsub, a one verification platform that helps businesses monitor fraud worldwide and at every step of the customer journey, showcased its cutting-edge KYC and AML solutions specifically tailored for the APAC region. These solutions help organisations combat deepfake online content and synthetic fraud in the AI era. Underlying these challenges, Sumsub’s Penny Chai, VP of Business Development APAC, shared with AsiaBizToday how combatting deepfakes and ensuring compliance also contributes to the larger cause of financial inclusion. Excerpts:
Q: Financial inclusion is leading to greater overall innovation, economic growth, and consumer knowledge. How do you see this being a secure ecosystem?
A: Financial inclusion plays a pivotal role in fostering innovation, driving economic growth, and empowering consumers with knowledge. The introduction of new financial products and services has significantly broadened access to money, contributing to increased innovation, economic prosperity, and a more informed consumer base.
However, as financial services embrace digitisation for wider accessibility, the challenge lies in ensuring a secure ecosystem. The growing prevalence of digital platforms has unfortunately given rise to a heightened risk of fraud, with perpetrators leveraging sophisticated technology, such as deepfake techniques. Notably, our internal statistics show that Singapore has the highest percentage of deepfake fraud (5.1%) among all types of fraud, surpassing other Southeast Asian countries.
Recognising these challenges, we place a paramount emphasis on establishing a secure, accessible, and inclusive digital future for both users and businesses. At Sumsub, we are committed to proactively addressing the evolving landscape of financial fraud. By eliminating fraud and verification hurdles, we actively contribute to a world where everyone, regardless of age, location, or technical proficiency, can securely access and utilise financial services.
Q: Technologies such as digital transactions are making it easier for institutions to achieve financial inclusion. What is your take on this?
A: The rise of technologies like digital transactions is helping institutions to include more people financially, especially in countries where there is a high percentage of underbanked and unbanked. With digital platforms, users can easily make payments, transfers, and store money electronically using devices connected to banks or authorised entities.
This is especially useful in places like Southeast Asia, where the growing prevalence of smartphone usage is concurrently fuelling a significant increase in the accessibility of financial services. According to Insider Intelligence, the number of people using smartphones in Southeast Asia is expected to go up from 88.0% in 2022 to 90.1% in 2026. With more people owning smartphones, managing money online becomes more accessible, providing a simpler way for everyone, especially those underserved by traditional banking, to manage their finances and engage with financial institutions.
Q: Advancements in fintech are helping organisations combat deepfake online content and synthetic fraud in the AI era. What do you think is the status?
A: Biometric authentication is considered one of the most secure methods of identification and verification today. This is due to its high level of accuracy and ability to ensure the verified person’s presence. In a recent survey by Okta on Customer Identity Trends in 2023, 42% of people in the Asia-Pacific region prefer using biometric authentication compared to other verification methods like multi-factor authentication or password less login.
However, the current application of biometrics is predominantly confined to the onboarding process. Many businesses and organisations utilise biometric authentication primarily to verify the identities of new customers and employees during the registration or hiring process.
Recognising the importance of continuous verification is essential to outpace the evolving strategies employed by fraudsters. While the inception of eKYC initially proved effective in countering common onboarding frauds, our research and close dialogues with compliance officers and regulators have provided invaluable insights. It has become evident that a substantial portion of fraudulent activity occurs post-onboarding. This realisation has shaped the evolution of our platform, extending its capabilities to encompass end-to-end fraud detection.
At Sumsub, we are committed to constantly upgrading our solutions and developing new features to help businesses combat deepfakes and synthetic fraud. One of our latest innovations involves the integration of an advanced deepfake detector into our liveness solution, aligning it with cutting-edge AI technology to ensure that no fraudulent attempts go undetected.
Q: Powering a secure ecosystem is essential to promoting financial inclusion. What do you think is the reason behind driving growth in the digital asset industry and bridging the financial inclusion gap?
A: Approximately 50% of people in Southeast Asia are unbanked, lacking access to even the most basic banking services. For this reason, they are excluded from formal financial systems, making it challenging for them to access loans or credit lines. For these individuals, digital assets can play a transformative role in improving financial accessibility. Since digital assets are stored digitally and don’t rely on physical banking infrastructure, they have the potential to enable direct access to the unbanked.
Besides payments as the obvious use case, digital assets can also enable access to alternative financial services, such as loans (incl. peer-to-peer lending), savings or insurance. For example, in Southeast Asia, where micro, small, and medium enterprises (MSMEs) form the backbone of the economy, access to finance remains a significant challenge for many of these mom-and-pop stores and micro-enterprises in the region. Lending platforms tailored to facilitate micropayments and smart contracts can prove instrumental in supporting these SMEs. This way, businesses can access micro-financing without the usual bureaucracy of traditional banks, helping them secure small loans and working capital.
Q: Exploring emerging financial fraud trends and how is the evolution of AI making it more complex to catch financial crimes? How is Sumsub helping the fintech industry stay on top of these risks?
A: The evolution of deepfakes pose a continuous threat for the fintech industry and beyond. Our latest report on the “State of Verification and Monitoring in the Crypto Industry 2023” found a worrying 128% increase in deepfake fraud in the crypto industry. But when we look at all industries, the overall increase is even more startling, being twice as high.
While it is getting harder to detect deepfake and synthetic fraud online, we recently released a set of models to enable better detection. Our in-house AI and ML Research Lab recently developed our ‘For Fake’s Sake’ solution – a set of four distinct machine learning-driven models for deepfake and synthetic fraud detection that can help in the detection of visual assets. With For Fake’s Sake, we’re hoping to provide the AI community, especially developers, AI researchers and scientists, with a platform that they can test, experiment as well as explore innovative ways to tackle the escalating threat of deepfakes.
Q: Any other issue that you may want to highlight?
A: We’re really excited to be participating in the Singapore Fintech Festival this year. Speaking to attendees has helped us gain insights into their challenges and preferences, helping us enhance our support. In the competitive KYC space, there’s a significant demand for transaction monitoring and ongoing fraud prevention, given recent events. While KYC is familiar, what’s catching people’s interest is the speed of verification through non-document methods.
Non-Doc Verification allows companies to onboard users securely without requiring the upload or scanning of ID documents. This technology has gained traction in various countries’ regulatory frameworks, offering businesses in regulated industries like neo-banking, payment, and crypto a way to stay compliant while maximising efficiency and reducing operational costs.