As eCommerce and ePayments take hold of daily life amid the social distancing measures across the region, what risks are you prepared to take?
Businesses have been greatly impacted by the COVID-19 pandemic. In the relatively bleak climate, innovators look for opportunities amid the crisis. Or, in simpler terms: when the going gets tough, the tough gets going.
It’s time to figure out how to glean the gains in the face of increasing risks, as most people stay home for work, education, food and entertainment.
As the ‘new normal’ takes hold, digital commerce and communication have become the norm for most households and businesses. This big shift opens up huge opportunities not just for online marketplaces, it is a treasure trove for cybercriminals as well.
To gain deeper insights into this shift, and for ways to maneuver effectively as we traverse the new landscape, CybersecAsia speaks with Justin Lie, Founder and Chief Executive Officer at SHIELD.
How has the COVID-19 pandemic affected eCommerce, digital wallets and marketplaces in Asia Pacific?
Lie: The COVID-19 pandemic has brought about a new ‘normal’, characterized by a constant state of flux. With lockdowns in place across several countries, many consumers now live, work and shop from their homes. These changing consumer behaviors have impacted eCommerce, digital wallets, and marketplaces, which are witnessing unprecedented spikes not just in Asia Pacific but around the world.
The use of digital wallets has been on the rise in Asia Pacific for many years – just look at the success of brands like Grab, GOJEK and OVO in ASEAN. With ‘normal’ life coming to a standstill, digital payments have become a powerful tool – in fact, this pandemic might be the push for some countries to truly become cashless societies.
Social distancing measures have naturally caused a decline in brick-and-mortar shopping – in several countries, retail stores have closed due to lockdowns – leading to a broader level increase in ecommerce; however, there are winners and losers. Groceries, household products, health products and streaming services are seeing a significant uptick, whereas luxury goods and fashion products are seeing a downturn.
As for online marketplaces, with their breadth of products and depth of stock, they have become increasingly popular choices. Similar to eCommerce, these marketplaces might face challenges in the form of supply-side disruptions, with merchants unable to do business under quarantine periods. Fortunately, there should be alternative options across the marketplace which consumers can turn to.
What are some issues buyers and sellers face with ePayments in today’s pandemic climate?
Lie: The COVID-19 pandemic has clearly accelerated the shift towards digital payments, but a common concern among users is the robustness of security measures.
With cybercriminals looking to cash in on the increasing fear and uncertainty around COVID-19, consumers and merchants need to be extra vigilant when visiting new websites, opening emails or receiving unsolicited phone calls. Consumers are increasingly vulnerable to COVID-19 phishing scams, in which their sensitive information and account credentials are collected and ultimately used for account takeover or payment fraud.
On the seller side, there are two potential issues around ePayments. Firstly, many brick and mortar stores will be rushing to increase their digital capabilities in order to remain afloat during these tough times. These organizations will primarily be focused on operationalizing the digital model and likely neglecting to consider the potential security issues they could face.
On the other hand, there will be merchants that may have an established ePayment process in place but due to increasing demand, be tempted to relax their fraud measures to ease friction, again leaving themselves vulnerable to attacks.
Fraudsters are using increasingly sophisticated methods to attack, and sellers need to remain vigilant and be prepared to detect and prevent these attacks.
In what ways is ‘zero fraud’ a boon and a bane for the eCommerce marketplace?
Lie: eCommerce fraud has substantially increased in recent years, especially with the rise of more sophisticated technologies available around the world.
eCommerce platforms and marketplaces operate in large and complex ecosystems made up of many different stakeholders – the interdependence and increasing complexity between these stakeholders create vulnerabilities for fraudsters to exploit.
Online merchants are feeling the impact of fraud through chargebacks, losses of revenue (from unrecovered products) and loss of consumer trust. Unfortunately, once a merchant gets hit by fraud, the knee-jerk reaction is often to put in place a wide range of restrictions and controls, in turn increasing false negatives and low acceptance rates – ultimately hurting the customer experience and creating barriers to company growth.
While ‘zero fraud’ could feasibly be achieved, the reality is that zero fraud likely equates to untapped potential. If you’re aspiring for hyper-growth and large market share, you must accept that you will become a major target for fraudsters (and even ordinary consumers hoping to get a few extra bonuses). This is particularly so when companies introduce products and services and enter new markets and geographies.
Ultimately, risk is a natural part of business growth and being risk averse will only restrict growth. To put it simply: when an investment is risk-free, it is also return-free. The trick is knowing how to manage fraud in the right way and this where SHIELD can support. SHIELD leverages over a decade of domain intelligence along with artificial intelligence and machine learning technologies to detect patterns and micro changes in user behavior, enabling organizations to predict and prevent fraud before it happens so that they can scale without risk.
What role, in your opinion, does AI play in eCommerce, fraud detection and cybersecurity today and in the immediate future?
Lie: Digitization, automation, and artificial intelligence (AI) have been the catalyst for transformation across multiple industries. The integration of digital technologies — AI being one of many — into different areas of business is bringing a new level of efficiency to how businesses operate.
Today, AI is already largely prevalent in ecommerce platforms, with the sheer volume of transactions and information exchanged, it is impossible to implement manual checks and balances. We see hyper-personalized content, live chatbots and virtual assistants, and AI-enabled inventory management. Algorithms continue to predict and provide recommendations, and automation continues to improve warehouse operations. AI will continue to unlock new dimensions in eCommerce, especially to engage customers in more meaningful and productive ways.
As the application of AI continues to advance and spread through business and technology use cases, chief information security officers and security professionals must be aware of the AI-driven risks in their organizations and how they themselves can also use AI to defend against potential exploits and attacks.
Traditional risk assessment and rules-based models, which rely on historical data, only let you manage fraud after it occurs, potentially incurring huge losses in the process. AI and machine-learning-based solutions, like SHIELD’s Autonomous Risk Intelligence platform, can identify patterns based on millions of data points in real-time, enabling organizations to analyze and predict attacks before they happen.