Agenda

Introduction

FDP overview
Global adoption of FDP
India FDP market landscape

FDP market landscape in Southeast Asia

FDP playbook
Appendix

2
Introduction

As businesses continue to operate in an increasingly globalised and technologically advanced

world, the risks associated with fraud are growing. Geopolitical and economic factors, combined
with the ever-increasing sophistication of fraudsters, have made it difficult for organisations to
protect themselves against various types of fraud, such as synthetic identities, bot attacks and
account takeovers, to name a few. The consequences of falling victim to fraud can be severe, not
only in terms of financial losses but also damage to a company’s reputation. Indeed, when
creating new accounts, approximately 9% of instances are associated with fraudulent activities.
From July to December 2021 alone, a staggering 130 million fraudulent incidents were recorded
during account logins. These numbers highlight a pressing necessity for implementing enhanced
security measures. To stay ahead of the curve, businesses must keep up with the latest trends and
best practices for fraud detection and prevention.

To this effect, Bureau conducted a survey to study the impact of digital fraud globally, especially
in India and Southeast Asia (SEA), to address the increasing significance of fraud detection and
prevention (FDP) solutions in the global marketplace. This report provides a comprehensive
analysis of the FDP market globally and regionally, highlighting the latest trends and best
practices for fraud detection and prevention.

Praxis Global Alliance, a top research and consulting firm, collaborated with the Bureau to provide
critical insights for businesses seeking to manage digital fraud risks effectively. The report
highlights the growing need for FDP solutions, with the global FDP market expected to reach US$
86B by 2027 and 60% of organisations planning to increase their FDP budget in the next two
years. FDP solutions can reduce fraud operational costs, false positives, and chargebacks,
facilitating real-time monitoring, seamless CX, and orchestration capabilities, eliminating white
spaces across various industries. Investing in FDP solutions can lead to potential benefits such as
cost reduction, improved user experience, and better orchestration capabilities, enabling
businesses to make informed decisions and protect their financial and reputational interests.

3
Glossary

Acronym Description Acronym Description Acronym Description

AML Anti money laundering CTS Cheque truncation system NACH National automated clearing house
AMLS Anti money laundering suite CX Customer experience NEFT National electronic funds transfer
APAC Asia-Pacific D2C Direct-to-consumer NFC Near field communication
API Application programming interface DLA Digital lending applications NFT Non-fungible tokens
AR Augmented reality DOS Denial of service NPS Net promoter score
ARPA Average revenue per account FDP Fraud detection and prevention OCR Optical character recognition
ARR Annual recurring revenue FMR Fraud monitoring return OTP One-time password
ATO Account takeover fraud FS Financial services POC Proof of concept
Industry related

B2B Business-to-business GTM Go-to-market RBI Reserve bank India

B2C Business-to-consumer IDV Identity verification ROI Return on Investment
BD Business development IFP Intelligent forms processing RTO Return to origin
BEC Business email compromise IMPS Immediate payment service SaaS Software as a service
Banking, financial services and insurance
BFSI IOT Internet of things SEA Southeast Asia
sector
BGV Background verification IP Internet protocol SEO Search engine optimization
Insurance regulatory and development
BNPL Buy now, pay later IRDAI TAM Total addressable market
authority of India
BSA Bank secrecy act KYC Know your customer TAT Turn around time
CAC Customer acquisition cost L&D Learning and development TPA Third party administrators
CFR Central fraud registry LTV Life time value UI / UX User interface / user experience
CPL Cost per lead MCA Ministry of corporate affairs UPI Unified payments interface
CSAT Customer satisfaction MRR Monthly recurring revenue VR Virtual reality
B Billion INR Indian rupee QOQ Quarter on quarter
CAGR Compound annual growth rate M Million YOY Year on year
Units

CY Calendar year T Trillion

FY Financial year US $ United States dollar

4
Highlights: Global

Highlights of the Global FDP market

31B+ ~22% 86B+

FDP TAM, 2022 (US$) FDP TAM CAGR, 2022 - 27 FDP TAM, 2027 (US$)

~58% ~22% ~69%

BFSI share in FDP TAM, 2022 E-commerce share in FDP TAM, 2022 Internet penetration, 2022

Source(s): ACI Worldwide, Industry reports, Press release, Praxis analysis

5
Executive summary

Executive summary: Global FDP landscape

• There are a variety of fraud like bot attacks, website cloning, mule accounts, among others that are present across
sectors, whereas certain fraud are industry-specific like KYC fraud (BFSI), delivery fraud (e-commerce) etc.
• FDP solutions help enterprises in reducing fraud operational costs, false positives and chargebacks pre and post –
authorization.
• Advancements in AI and deep learning technologies have strengthened the capabilities of FDP solutions.
• FDP solutions benefit all the participating stakeholders (user, FDP player, payment gateways, etc.) in an ecosystem of a
digital transaction.
• Budget constraints, poor / unstructured data quality are the key headwinds for FDP players; growing digitalization, high
in-house FDP costs are the key growth drivers.
• 60% of organizations are expected to increase their FDP budget in the next two years as they look to advance their
automation and analytical capabilities to fight fraud.
• New-age SaaS FDP players help organizations not only in detecting fraud post occurrence but also in preventing fraud
from occurring by using advanced analytics à reduced losses.
• FDP buyers need solutions that can balance user experience with robustness of fraud prevention.
• The global FDP market stood at US$ 31B+ in 2022 and is expected to reach ~US$ 86B in 2027, growing at a CAGR of
22%; APAC is the fastest-growing region.

• FDP solutions enable seamless CX, orchestration capabilities, real-time monitoring etc., facilitating in the elimination of
white spaces across industries.

6
Highlights: India

Highlights of the India FDP market

1.5B+ ~37% 7.6B+

FDP TAM, 2022 (US$) FDP TAM CAGR, 2022 - 27 FDP TAM, 2027 (US$)

~73% ~24% ~62%

BFSI share in FDP TAM, 2022 E-commerce share in FDP TAM, 2022 Internet penetration, 2022

Source(s): Source(s): ACI Worldwide, Industry reports, Press release, Praxis analysis

7
Executive summary

Executive summary: Indian FDP landscape

• Total addressable FDP market was US$ 1.5B+ in 2022 and is projected to reach US$ 7.6B+ by 2027, growing at a CAGR
of 37%.
- FDP SAM was US$ 570M+ in 2022 and is expected to cross US$ 3,152M by 2027, growing at a CAGR of 41%.
- BFSI constituted 70%+ of the total FDP addressable market in 2022 followed by e-commerce (~24%).
- Outsourced FDP services held ~35% of FDP TAM in 2022 and are expected to increase to 40% by 2027.
• India to have ~1,144M internet users by 2027, growing at a CAGR of 5%; 62% was the internet penetration in 2022 and is
expected to be ~78% by 2027.
• Government has laid down various key regulations like 2-factor authentication, KYC process, etc. to mitigate fraud that
is expected to drive spend on FDP solutions.
• Volume of digital transactions to be ~122B and is expected to be 1.9T+ by 2027, growing at a CAGR of ~74%; growing
digital commerce, increasing adoption of digital native products, and rising internet penetration are the key factors
driving digitalization.
• Enterprises in Banking and financial services, Insurance, and Gaming sectors typically develop in-house FDP solutions.
• Frictionless CX with robust security, unavailability of quality data are the key challenges faced by FDP players; factors
such as accelerating digitalization, an increasing number of fintech startups are creating headroom for the growth of
FDP players in India.
• High fraud detection accuracy, real-time monitoring, and ease of integration are the key criteria influencing the
purchase of FDP solutions.

8
Agenda

Introduction
FDP overview

Global adoption of FDP

India FDP market landscape

FDP market landscape in Southeast Asia

FDP playbook
Appendix

9
Evolution of fraud

With advancements in technology, fraud has become more sophisticated nowadays;

authentication processes are also evolving to detect and prevent fraud
Fraud is evolving rigorously from voice phishing to AI driven sophisticated and complex fraud
Pre 2000s
• Voice 2004
phishing • Virus
2007
• Trojan Horse
• Computer • Identity 2010
Worm • Theft
• DNS attack
• Phishing 2013
• Botnets
• SQL attacks • Social Present
engineering • Identity theft
• DoS • Account takeover
• Botnets • DDoS
• Malicious • Ransomware
emails • Keylogger
• PoS • Card-not-present
• Pharming fraud
• Pharming

To combat and mitigate new complex fraud, advanced and strong authentication processes are being implemented by FDP players

Rules – based Layered Multi – factor Risk – based Passwordless Continuous

authentication authentication authentication authentication authentication authentication

Note(s): This is not the exhaustive list

Source(s): Industry reports, Secondary research, Praxis analysis

10
Defining digital fraud

Digital fraud happens when an individual with malicious intent takes advantage of
the various points of vulnerabilities across a digital transaction journey of a user

Account opening Login and Transaction Post transaction

• Know-your-customer (KYC): Largely used • User verification based on passwords and • Verification sent to email ids of the
by banks requiring verification of one-time-passwords sent to the purchase or transaction made
biometrics and identification documents registered email ids or mobiles
Verification including unique ids, permanent account • Regular updates sent to the user on email
methods to numbers etc. • Use of additional layer of authentication and phone to indicate the geo-position
detect and that requires the user to detect captcha, and status of delivery
prevent fraud • Additional verification of personal images recognize images or solve a simple
and gestures for fintechs arithmetic problem

• Verification of emails and phone numbers

for other industries including e-commerce
Points of • Lack of awareness in sharing OTPs • Points of integration between the • Validation of intent
vulnerabilities intermediary and payment platform
• Phishing emails or messages • Failure in detection of collusion
• Third party payment merchants
• Middlemen • Post facto alerts to merchant / buyer

• KYC fraud • Account take over (ATO) • Claims related fraud

• Synthetic identity • Promo abuse • Return fraud

Examples of • Promo abuse • Bot attacks • Mule accounts

fraud
• Social engineering fraud • Unauthorized chargebacks

• Credit card fraud

Source(s): Secondary research, Praxis analysis

11
Fraud use cases across industries

Each vertical has several key types of fraud [1/3]

Impact - Impact –
Phases of journey Fraud type Brief description volume value of
of fraud fraud

KYC fraud
• Fraudsters opening new accounts by either impersonating legitimate customers or using fake
identities to gain access to an existing account ◑ ◑
Account opening
Synthetic identity • Fabricated credentials where the implied identity is not associated with a real person ◑ ◑
Banking and financial services

Website cloning
• Cybercriminals create a ‘clone’ site of the original website and then send links to unsuspecting
users via emails, text messages, social media posts
◔ ◕
Account takeovers • Scammers use phishing and hacking techniques to access users’ accounts ◕ ◕
Login and transaction
Social engineering
• A fraudster gains the trust of an individual and 'tricks' them into sharing confidential information
or even transferring funds directly to the criminal ◕ ◑
Bot attack
• Bots mimic human interactions with web applications in an extraordinarily persuasive way
making it difficult to detect and manage them ◑ ◑
Mule accounts • Criminals transfer stolen money on behalf of others, usually through their bank account ◑ ◑
Stolen / fake credit card
• Scammers generate fake cards via credit card skimming where the scammer attaches a small
device to the transaction machine that cannot be easily noticed ◕ ◕
Post transaction
Identity fraud • Involves the use of a person's stolen details to commit crime, typically associated with CNP* ● ◕
Fraudulent fund transfers • Fraudsters use an emulator or app cloners to make a bank transfer or top up an account ◑ ◑
Account opening Intermediary fraud
• Fraud perpetuated by an insurance agent / corporate agent / intermediary / third party
administrators (TPAs) against the company and policyholders ◑ ◑
Insurance

Login and transaction Policyholder fraud • Fraud against the company in the purchase and / or execution of an insurance product ◕ ◑
◕ ◕
• Hiding a pre-existing condition or duplicate bills of exchange
Post-transaction Claims related fraud
• Fabricated documents to meet terms and conditions of the insurance
Note(s): * Card not present. This is not the exhaustive list

○ ◔ ◑ ◕ ●High
Source(s): Industry reports, Secondary research, Praxis analysis
Low
12
Fraud use cases across industries

Each vertical has several key types of fraud [2/3]

Impact - Impact –
Phases of
Fraud type Brief description volume of value of
journey
fraud fraud

Login and
Promo abuse
• Occurs when an individual customer, vendor / agency takes advantage of a promotion, abusing the coupon
policy ◕ ◑
◕ ◕
transaction
Retail and e-commerce

Payment fraud • Any kind of illegal online transaction performed by a cybercriminal

• Identity fraud
– Fraudster attempts to obtain personal user data via malware, fake websites, emails, etc.
Delivery fraud – Uses these to purchase goods on an invoice and have them sent to a different delivery address ● ◑
• Friendly fraud
Post- – Customer himself does not intend to pay for the ordered goods and claims that they never arrived
transaction • Receipt fraud: Using reused, stolen, or falsified online receipts to return merchandise for profit
• Price arbitrage: Purchasing differently priced but similar-looking merchandise and returning the cheaper item
Return fraud as the expensive one ◑ ◑
• Switch fraud: Purchasing a working item, and returning a damaged or defective identical item
• Wardrobing: Buying a clothing item with the intention of wearing it for a short time and returning it later

Phishing and spoofing

• Use of email / online messaging services to dupe victims into sharing personal data, login, and financial
details ● ◕
• Stealing confidential, protected, or sensitive data from a secure location and moving it into an untrusted
◑ ◕
Technology and internet

Data breach
environment à data being stolen from users and organizations

Login and
Denial of service (DoS) • Interrupting access of traffic to an online service, system, or network to cause malicious intent ◔ ◔
◑ ◑
transaction
Malware • Use of malicious software to damage or disable users’ devices or steal personal and sensitive data

Ransomware • Prevents users from accessing critical data and then demanding payment in the promise of restoring access ◑ ◑
Business email
compromise (BEC)
•
•
Sophisticated form of attack targeting businesses that frequently make wire payments
Compromises legitimate email accounts through social engineering techniques ◑ ◕
Note(s): This is not the exhaustive list

○ ◔ ◑ ◕ ●High
Source(s): Industry reports, Secondary research, Praxis analysis
Low
13
Fraud use cases across industries

Each vertical has several key types of fraud [3/3]

Impact - Impact –
Phases of journey Fraud type Brief description volume of value of
fraud fraud

Account opening Synthetic identity

• Fraudsters create fake new accounts using synthetic identities or fake credentials and identity
elements bought on the dark web ● ◕
Commonly used ways in which fraudsters hack into gamer accounts include:
• Creating spoof sites to steal login credentials.
Account takeover • Buying user credentials on the dark web for credential stuffing. ● ●
Real money gaming

• Phishing scams.
• Offering help or bonuses in-game in exchange for player credentials
• Fraudsters engage in promo abuse to test credit cards, create fake accounts, and hack existing
accounts
Login and transaction
Promo abuse
• Fraudsters take advantage of sign-up bonuses or marketing promotions by creating new fake
accounts ◑ ◑
• Online games and gambling sites that offer US$ 0 authorization fees are especially vulnerable to card
testing

Bot attack • Fraudsters program bots to automate and increase the speed and velocity of card testing ◑ ◑
Post - transaction Friendly fraud • Games with in-app purchases or microtransactions are especially prone to friendly fraud ◕ ◕
Account takeover • Fraudsters access stolen credentials for the purposes of accessing delivery service accounts ◕ ◕
Gig economy

Login and
transaction
Phishing
•
•
Phishing attacks are quite prevalent, resulting in a wealth of stolen data for ATO attacks
Fraudsters try to attract freelancers by posting fake job openings
◕ ◑
Pay to work
•
•
In this scam, freelancers are asked to send payment before being hired
Fraudsters making individuals pay upfront to work for them earn a profit by signing people up ◑ ◑
Post - transaction Money mules
• One of the most common roles for a mule is in “parcel mule” scams. Fraudsters employ people to
receive stolen goods, repackage them, and send them off to an address owned by the fraudster ◕ ◕
Note(s): This is not the exhaustive list

○ ◔ ◑ ◕ ●High
Source(s): Industry reports, Secondary research, Praxis analysis
Low
14
Defining FDP solutions

FDP solutions are technology platforms and tools that proactively monitor,
alert and mitigate fraud across a digital transaction customer journey
Account opening Login and Transaction Post transaction
• Manual verification of identity • Multiple checks diminishes UX • Majority authentication alerts on
proofs is time consuming and error • Multiple authentication is a challenge various forums like SMS, email, etc
prone in case of numerous transactions • Calls for authenticating transactions
Current challenges • Waiting period 2 to 7 days • Time taking process pushes users to can hamper customer sentiments
• Multiple checks diminishes UX switch to user friendly applications • Source and destination might be
• Multi-factor authentication may be different for the same user account
cumbersome

• Verifies digital documents, gestures, • Detects anomalies based on real- • Proactively verifies the veracity of
images and video through advanced time monitoring of user behavior, returns or replacement requests and
analytics and integration with device/sim id, keystrokes patterns, alerts the business before the
FDP capabilities databases and bureaus in real time etc. transaction is completed
• Reduces the need for manual • Minimizes DoS, transaction time, and • Enhances the accuracy of intent
checks, multiple user touchpoints user verification needs prediction and reduces false positives

Identity proofing ü û û
tools
Authentication tools û ü ü
Bot mitigation ü ü û
Coverage of
FDP
approaches Device ID, telemetry ü ü û
Behavioral biometric ü ü û
Transaction and ü ü ü
event monitoring

Source: Industry reports, Secondary research, Praxis analysis

ü Completely ü Partially covered û Not covered
15
covered
Defining FDP solutions

FDP solutions utilize various sources and techniques to acquire, analyze and report data;
detection approaches can vary in sophistication based on the type of use case

Phases of fraud detection and prevention

Data sourcing Detection Investigation Reporting

• Internal and external • Detection engine • Case management • Reporting framework

data – Rule based • Case investigation – Predefined report library
– Transactions – Predictive • End-user warning – Ad-hoc reporting
– Customers • Data segregation – Data export interfaces
– Events – Internal
– Employees – Credit card
– Brokers – Application
– E-banking

Levels of sophistication in fraud detection analysis

Cross channel -
Endpoint - centric Navigation - centric Channel - centric Entity link analysis
centric
Encompasses Analyses session Monitors account Monitors entity behavior Enables analysis of
authentication, behavior behavior for a channel across channels relationships
device ID, geolocation
Source(s): Industry reports, Secondary research, Praxis analysis
16
Defining FDP solutions

FDP solutions are becoming more sophisticated AI driven and predictive

owing to advancements in AI and deep learning technologies

Pre-2000s 2000s 2010s 2020s

• Rudimentary local data- • Companies began to • Fraud became a bit more • Advancement in
matching systems were collaborate and share data organized and migrated to technologies like use of
being introduced to improve on fraudsters, with the digital space analytics made FDP
the speed and accuracy of combined intelligence • Geographic, social and solutions more predictive
risk identification sources biometric profiling created a and proactive reducing false
full risk profile for positives
• Digitalization was not • Companies collaborated financiers and insurers • Emergence and adoption of
prevalent, hence fraud was with using IFP* data sheets • Companies moved to in- other technologies like
committed in physical forms and block cipher techniques house fraud detection and behavioral biometrics,
to create cross-sector prevention solutions computer vision analytics,
data-matching solutions • Customers experience was AR / VR etc. in FDP
diminished because of solutions
multiple security checks • Exponential increase in
volume of data has made
FDP solutions orchestrate
variety of tools to track user
behavior
• Customer experience is
enhanced attributing to
speed of proactive fraud
detection

Note(s): *Intelligent Forms Processing

Source(s): Secondary research, Praxis analysis

17
Defining FDP solutions

Physical biometrics, computer vision analytics, and behavioral biometrics are

the top three utilized FDP technologies
Low cost of Most
Utilized in the following Expected impact development mature
Technology Description phase in a digital Examples on FDP tech when
customer journey fully mature
Physical • Analyzes parameters such as - • Account opening • Facial scan to login to a
biometrics fingerprint, facial parameters or voice • Login and transaction banking app
Computer • Use of computer or artificial intelligence • Account opening • Liveliness tests and selfie
vision for analyzing video or photographic analysis during KYC in a
analytics data fintech app
• Behavioral biometric authentication
• Account opening
Behavioral includes keystroke dynamics, gait • Typing speed analysis to
analysis, cognitive biometrics, and • Login and transaction
biometrics detect bot attacks
• Post transaction
signature analysis
• Allows a company to smartly decipher • Login and transaction • Analysis of ticket size,
and report financial anomalies by frequency and volume of
Data science
filtering out fraudulent transactions transaction originating
and analytics
from large datasets from a user to detect
anomalies
• Use of distributed digital
• With blockchain, one can share the
id network to login to
Blockchain / recorded data in real-time and update it
banking and logistics
distributed with the approval of all parties who have • Login and transaction
apps and trace
ledger access to the data but the approach • Post transaction
authenticity of the
technology needs all the participants to be on the
customer and the
same platform
merchant
• VR and AR are prime mechanisms for • Login and transaction • Usage of VR/AR
Virtual /
enabling a wider range of payment technologies in rotation
augmented
authenticators confuse the fraudster
reality
during the login process High cost of Relatively less
development mature
Source(s): Secondary research, Praxis analysis
Low
High
18
Orchestration layer in FDP solutions

Orchestration1 of risk management capabilities along the digital user journey

Fraud detection

Account Account
Account opening Login Transactions Login
activity recovery

Identity Identity Identity Identity Identity Identity

proofing affirmation affirmation proofing proofing affirmation

User Authentication

Orchestration layer

Risk analytics Access management UI layer

Note(s): 1. A solution that connects tools producing risk and trust signals to underlying analytics tools, and provide step-up authentication in response
Source(s): Industry reports, Praxis analysis

19
FDP ecosystem

FDP ecosystem consists of multiple stakeholders like the user, FDP player,
fraudster, Govt., Court of law and investigation agencies
Regulations/Guidelines to Government
be followed by Compliance rules
organisations

User Performs actions

to initiate the • E-commerce Court of law
process platform
• Banks • Payment
Gateways • Merchants
• Financial services • Logistics

Proactively
FDP detects, alerts
After thorough
investigation, the case
and prevents User authorization
User authentication Source and is transferred to the
fraud by checks based
by device, ID and destination court of law for final
upon real time user
location verification verification verdict
behaviour device
analytics
Investigation
Fraudster agencies
Has an intent to
fraud or game • ID Theft • ATO fraud
• Return to origin
the system • KYC fraud • Bot attacks
• Chargeback
• Synthetic • Fraudulent fund
• Credit card fraud
identity transfers

Post fraud the case goes to the investigation agencies

Source(s): Industry reports, Secondary research, Praxis analysis
Account Login and Post
opening Transaction transaction FDP solutions
20
FDP ecosystem

FDP solutions benefit all the participating stakeholders in an ecosystem of a

digital transaction
Government/
FDP Platforms/ Payment Investigation/
Customers Banks Merchants
stakeholders Intermediaries gateways Enforcement
agencies

Protected and powered by FDP solutions called through either an API or integrated within the product technology stack

Role played • Analyzes various • Analyzes various • Continuous or • Continuous or • Analyzes various • Provides extensive
by FDP device and device and event-based event-based device and login and
solution behavior metrics to behavior metrics to monitoring to monitoring to behavior metrics to transaction related
alert about possible alert about possible detect fraudulent detect fraudulent alert about possible data when
fraud fraud transactions and transactions and fraud authorized
payment origins account origins
• Continuous or
event-based
monitoring
• Reduced customer • Enhanced customer • Enhanced real time • Reduced • Reduced RTOs • Better auditability
journey time and merchant protection of fraud chargebacks false positives of transactions
loyalty
• Enhanced user • Reduced • Reduced costs of • Reduced loss from • More intelligence to
security and • Increased volume transaction time investigation fraud investigate
protection of of purchases
• Increased volume • Reduced internal • Repayment of cost
consumer data
Benefits • Increased revenue of transactions spend on fraud of logistics in case
obtained • Improved customer realization talent and solutions of a guarantee
• Enhanced customer
experience option
• Minimization of loss trust and adoption • Reactive analysis to
from fraud proactive • Improved customer
intelligence for experience and
• Insurance against
loans and AML loyalty
false positives
analysis

Note(s): RTO – Return to origin

Source(s): Secondary research, Praxis analysis
21
Myth vs fact

FDP solutions are wrongly assumed to be unnecessary and not worthy however, FDP solutions
help enterprises in reducing fraud operational costs and false positives

Myth Fact
Detects new and evolving fraud attacks: Having advanced AI /
FDP solutions are not worth the extra cost: The cost of ML technology, FDP solutions enhance the chances of
implementing FDP solutions must be weighed against costs like detecting new and unexpected fraud. Organizations have
in-house FDP technology & manpower and loss due to “false successfully witnessed a 30-50% decrease in malicious fraud
positive” alarms with the help of FDP players

External audit can effectively prevent fraud, hence no need Significantly reduces chargebacks pre and post –
for FDP solutions: A financial statement audit may or may not authorization: Protects digital payments from fraud.
involve proactive efforts to specifically identify fraud, it is a A chargeback solution allows businesses to act on dispute
passive detection method inquiries and chargeback alerts in real-time post-authorization

Lowers fraud operational costs by reducing manual review

FDP solutions are difficult to implement: Since FDP solutions rate (companies have eliminated 10 - 20K hours in manual
are offered as SaaS and in most cases integrated via APIs and investigations per year): Automatically approves / declines
plug-ins, the implementation is simple and smooth orders according to customizable policies, reducing the burden of
manual reviews and associated operational costs

Helps to accept more good orders (reduces false positive

Fraud prevention is necessary only for large companies and
rates by >40%) and increase revenue: Accurately assesses a
not SMEs: Fraudsters are now targeting mostly mid-sized
customer’s trustworthiness on a faster and larger scale à
businesses and startups which do not have enough tech
declining bad orders, accepting more good orders, and
capability to combat fraud
reducing false positives
Source(s): Industry reports, Secondary research, Praxis analysis

22
Headwinds and tailwinds

Budget, poor data quality and staffing limitations are the main challenges faced by
FDP players; growing digitalization, high in-house FDP costs are the key drivers

Headwinds / Challenges Tailwinds / Opportunities

Budget / financial restrictions: Developing a FDP solution that Accelerating digitalization: Digital transformation makes
is compatible for different businesses is expensive to implement businesses prone to digital fraud creating a need to deploy
advanced and dynamic FDP solutions
Poor data quality or integration: Integration issue arise when
the quality of data from clients is not standardized High in-house FDP development costs: Developing an FDP
solution in-house is expensive and time-consuming, hence
Staffing / in-house skills limitations: Staff often lack the organizations adopt FDP to speed their time to market and
essential skills needed to develop and implement a FDP solution improve overall CX

Lack of perceived ROI: Absence of expected ROI makes Tech capabilities crunch: Developing an FDP solution requires
investments constrained technical capabilities and talented resources which is a challenge
for most organizations
Data governance and transparency concerns: Maintaining
transparency with the clients makes it challenging for FDP Quick installation and implementation: With the prevalence of
players to share all the data API model, FDP solutions can be quickly implemented

Security risks / vulnerabilities: Clients face security risks as Increasing advanced digital fraud: High volume of modern and
they share their confidential data with the FDP solution more sophisticated fraud need advanced solutions that can
provider identify the nature and origin of fraud in real time

Excessive false positives: Excessive false positives hampers Lack of expertise: Organisations don’t have the awareness and
client’s reputation in front of their users bandwidth to understand advanced digital fraud creating a need
for external expert support

Source(s): Industry reports, Secondary research, Praxis analysis

23
Organizational trends in FDP

Organizations are expected to increase their budgets on FDP in the next two years as they look
to advance their automation and analytical capabilities to fight fraud

60% of organizations are expected to increase their FDP Largest spend is expected to happen on physical biometrics,
budget followed by cognitive vision and behavioral biometrics

How are organizations’ anti-fraud technology budgets expected to What emerging technologies do organizations use to fight fraud?
change in the next two years?

Magnitude of change in FDP budget across companies Spend on emerging fraud detection technologies
In %, 2021 In %, 2021

37% 39%
48% 49%

12%
43% 23%
17% 17%
35% 26%
18% 16%
17% 34% 15%
20% 19%
2% 3% 10%
Significantly Slightly Remain the Slightly Significantly Physical Computer vision Behavioral Blockchain*
increase increase same decrease decrease biometrics analysis biometrics

Do not currently use, but expected to

Currently use
deploy in next 1-2 yrs
Do not currently use, but expected to
Note(s): * Distributed ledger technology
Source(s): ACFE report (survey N = 80,011) 2022, Secondary sources, Praxis analysis deploy in more than 2 years from Do not expect to use
now
24
 Fraud across digital transaction user journey

Largest proportion of fraud occurs during the new account creation phase, the origin to
transaction fraud; however, organizations largely monitor transactions

Out of the total fraud instances, 45M occurred during new account More than 26% of organizations monitor transactions
creations, 130M during logins & 192M during transaction payments

# of global transactions by customer journey % of companies monitoring instances of fraud

In B, Jul – Dec 2021 In %, 2021

26
43% 41%

6 29%
0,5 26% 25%
21% 20%
New account Logins Transaction
creations payment
Fraudulent instances Fraudulent Proc urement / Fraud by Money Fraud Identity thefts / Inventory theft
9.0% 0.5% 3.2%
(%, Jul – Dec 2021) disbursements / purchasing customers / laundering committed by ATO / fraud
outgoing fraud first-party vendors /
Fraudulent instances payments fruad contractors
45 130 192
(M, Jul – Dec 2021)
Fraud attack YOY
(2020 -21) growth 50 – 70% 20 – 50% 40 – 70% Largely transaction fraud Account creation / login fraud
rate

Source: Lexis Nexis report, ICEF report, Praxis Analysis

25
Transaction fraud

Most of the transaction fraud happens because of fake logins; FDP players
and FIs should effectively monitor logins to detect fraudulent activities
Effective gate-keeping at the login stage can help in mitigating transaction-related fraud

Fraudster

Fake logins
Compromised Impersonated Physical forgery
Digital payment
credentials authorized party / counterfeit

Transaction fraud
Misused account
Took over information /
account payment
instrument

Payment fraud

• Bad actors once successfully onboarded in the login stage, it is difficult to prevent transaction fraud
• FDP players and financial institutions should have a robust model to identify fraudulent activity at the login stage

Source(s): Industry reports, Secondary research, Praxis analysis Attempt to create fake
logins
26
Cost of fraud

Inadequate coverage of login fraud and ineffective measures to counter fraud

cost US organizations 3X - 4X of every dollar lost to fraud
Cost of fraud in FS includes fees for applying, underwriting and Cost of fraud in e-Commerce includes logistics, merchandise
processing, fines, interest legal fees and cost of recovery replacement and redistribution costs

Cost of fraud in US financial services for every US$ 1 of Cost of fraud in US e-commerce for every US$ 1 of
fraud fraud
In US$ In US$

3,78 3,36
3,35 3,13

2019 2020 2019 2020

Losses Brief description Losses Brief description

• Non-refundable amount charged by banks during loan
Application fees
application
Underwriting • Collected by underwriters for securing financial instruments Logistics and
• Refers to the expenses of packages, transport and
fees (stock issuances, mortgages, insurance policies) redistribution
storage associated with each order
cost
• Payment processing fees are the costs that business owners
incur when processing payments from customers
Processing fees
• Processing charges- At the time of processing a loan, a bank
will be bearing some cost related to administration
• Penalty on financial institutions for lacking regulatory
Fines Merchandise
compliance and due diligence • The amount which is spent to restock an item after it has
replacement
Rate of interest that can be legally charged on any type of been sold (managing inventories)
Interest legal fee
• cost
debt
Cost of recovery • Includes investigation cost (reviewing contracts and fees)

Note(s): The list of losses is not exhaustive

Source(s): LexisNexis report, Secondary research, Praxis analysis 27
 Data analytics

Analytics is the widest used technique to detect fraud, but its largely
ineffective as organizations rely largely on internal data
~55% organizations have adopted techniques like emotional tone analysis Large part of the intelligence in the analytics is derived from internally
and cryptocurrency tracing analysis to prevent fraud structured data, resulting in weaker filtering of fraud

Percentage of organizations using data analysis

Sources of data for analytics intelligence
Analytics are known to reduce fraud losses by over 5% in

techniques
traditional or hybrid cases and over 40% in digital first

%, 2021 In %, 2021
80%
Emotional tone/ 13% Of the organizations that use
sentiment analysis 55% analytics to detect fraud, ~50%
Cryptocurrency 17% rely solely on internal data
tracing/ 54%
transactional analysis
13%
Geographic data
mapping 38% 41%
22%
33% 31%
Text mining 27% 29%
25% 25%
models

16%
Artificial intelligence/
machine learning 22%

Link analysis/ 26%

social network analysis 17%
15%
Predictive analytics/ Internal Public Internal Law Social media Other third- Data from
modelling 16% st ructured records unstructured enforcement party data connect ed
12% data data or govt. devices
Data visualization 16% watch lists

Automated red flags/ 12%

business rules 6% • Companies mostly leverage internal data for detection of fraud, which
10% can prove to be insufficient for accurate detection and prevention of fraud
Exception reporting/
anomaly detection 6% • 3rd party FDP players have much more comprehensive data (wrt richness –
from multiple customers, vendors etc), and much better solutions for
Planning to adopt in the next 1-2 years Already adopted
decision-making
Source(s): ACFE report (survey N = 80,011), Secondary research, Praxis analysis

28
Deployment models

Enterprises use different deployment models to mitigate fraud

Built-in FDP In-house FDP Cloud based, End-to- API based Multi-layered
End solutions approach

• Payment gateways • Developing and • Managing software • A fraud prevention • When more than one
and providers have managing software solution is the buyer’s API meets the needs solution is needed
their own fraud solution and accountability while of modern, cloud and then organizations go
prevention tools infrastructure are infrastructure is web-app powered for multi-layered
buyer’s outsourced to third businesses solutions
• Service gathers the accountability party
user’s card and • API calls are fast, • Multi-layered
transaction data and • The advantage is • Greater elasticity affordable and solutions are used to
compares it with enhanced data and scalability becomes useful in enrich the data, to
previous transactions protection, product case of tech stack meet scalability
knowledge and • Integration process issues, to patch holes
integration is challenging as it • Several APIs exist in the line of defense
involves extra across the ecosystem; and to speed up
• Implementation integration costs, one license per manual reviews
costs are higher additional support provider is needed
fees and multi-year which aggravates the
contracts costs

Source(s): Seon report, Secondary research Praxis analysis

29
Deployment models

Although the large proportion of FDP solutions are developed on-premise,

there is an increasing trend towards adopting SaaS technologies

W
IP
Industries are shifting towards cloud based deployment models for Inefficient FDP techniques, budget constraints and talent crunch are
transaction monitoring in the recent years the main drivers for adoption of FDP SaaS solutions

• Current FDP techniques adopted fail to

Inefficient FDP
Implementations of transaction monitoring techniques
mitigate advanced fraud creating a need to
adopt advanced AI and ML driven FDP
solutions deployments in industries adopted solutions
% of client deployments
• Development of in-house FDP solution requires
Budget
technology and workforce incurring higher
constraints costs
58%

Talent and • Organizations lack talented pool of resources

41% technology and technologies required to develop FDP
35% crunch solutions
29%
Limited exposure • SaaS FDP solutions have significantly better
to different type exposure to varied use cases of fraud making
15% fraud them well equipped to prevent varied fraud
7% 9%
6%
• Excessive false positives make it challenging
Excessive false
to identify and mitigate fraud which is reduced
positives with the adoption of advanced FDP solutions
On-Premises ― Private cloud ― Public cloud ― Vendor-hosted
Host-managed Host-managed Host-managed and-managed

Total implementations till date Implementations in 2020 and 2021 • The pricing offered by SaaS FDP solutions
Pricing models
providers is flexible and relatively lower

Source(s); Gartner report (Survey of clients N = 1,150), Secondary research, Praxis analysis

30
Emerging fraud trends

Pandemic coupled with automated payments facilities and banking initiatives

have accelerated risk of fraud globally

Pandemic • Pandemic has facilitated new digital offerings

impact on
and hybrid work culture à increase in threats
fraud in the
• New automated payment types and risks
banking
(like invisible payments, etc.) ecosystem
provide challenges to banks in
widening the omnichannel
• Data breaches will occur at an
monitoring requirement
New increased scale à increase of
payment Identity identity fraud and account
• Fraudsters are highly likely to types will threat and
attempt to exploit these nascent takeover fraud
bring new synthetic
payment methods and the fraud identity
• 85%+ of the synthetic identities are
changing payment authorization exposure
paradigm missed by traditional fraud models
per ID Analytics research
Emerging
fraud trends

• Increase in frequency and scale of Increased

• Account Takeover (ATO) is a significant
scams and sophistication of social fraud focus Increase in
engineering techniques on the the loss area in most global markets
unbanked proliferation
• Target unbanked consumers (owing
and of account • Fraudsters are expected to shift focus from
underbanked takeover generalized attacks to more-targeted
to their very limited banking * populations ATO attacks
knowledge)

Note(s): Unbanked and underbanked* population are those who don’t have bank account and / or need to rely on alternative financial services outside of the banking system;
Invisible payment** where the payment is triggered automatically, via location or action, without the consumer having to do anything
Source(s): White paper by riskCanvas, Secondary research, Praxis analysis

31
Fraud prevention and detection

With real-time monitoring and ML techniques, FDP SaaS players prevent

fraudulent activities before they occur
Fraud detection
Fraud prevention
(Occurs post fraud attempt)
(Occurs before fraud attempt)

Diagnosing Identifying Investigating

Regular
vulnerability gaps in anti- cases of
monitoring
to fraud fraud controls alleged fraud

• Evaluating the existing • Identifying potential • Data assessment and • Investigating the cases
effectiveness of gaps in the processes continuous transaction of confirmed fraud
organizations’ anti - • Establishing fraud risk monitoring using • Incorporating results
fraud control tools profiles to reduce the advanced analytics à into future monitoring
risk of future fraud efficient detection of and detection processes
• Using ML (unsupervised fraudulent activities
/ supervised) to prevent
fraud

• New-age SaaS FDP players help organizations not only in detecting fraud post occurrence but also in preventing fraud from occurring by
using advanced analytics à reduced losses
• Fraud prevention is important as it helps in reducing financial loss, improving customer loyalty, increasing customer retention, and
preventing
Source(s): theSecondary
Industry reports, impact of fraud
research, on organization morale
Praxis analysis

32
CX vs robustness of FDP

FDP buyers need solutions that can balance user experience with robustness
of fraud prevention

FDP players are

focusing their
High

investments in
establishing
technology
capabilities that
(depends on less friction to reach the

Current level of end-to-end improve customer

FDP capabilities: while experience without
login screen and low conduct

compromising
security capabilities are
security robustness
User experience

advancing, user experience is

largely ignored
transition)

FDP players
Low

Low Security robustness High

(depends on high success rate of fraud identified and
prevented; false positives prevented)
Source(s): Secondary research, Praxis analysis

33
Agenda

Introduction
FDP overview
Global adoption of FDP
India FDP market landscape

FDP market landscape in Southeast Asia

FDP playbook
Appendix

34
Global FDP market

The global FDP market stood at ~US$ 31B in 2022, growing at ~22% CAGR
and is expected to reach ~US$ 86B in 2027
The global FDP market is projected to be ~US$ 86B Growing adoption of online applications, digital payments,
in 2027, growing at a CAGR of 22% digitization and IoT have propelled the global FDP market growth
Growth factor Details

Global FDP market

US$ B, 2022 – 27P • Global internet users increased by 6.4% annually 2018-21
Increasing online
applications & • Growing adoption of online applications and mobile
mobile banking banking services à many fake websites and mobile
applications

• A large population has shifted to online transactions (~40%

Adoption of adults use e-commerce, ~66% adults conduct online
digital payments financial transactions)
CAGR and NFC • As card-chip technology matures and new digital channels
technology emerge, increasing number of points of vulnerability are
~ 22%
exposed

86 Adoption of • Connected devices collect, transmit, and store various

digitization and consumer data, which creates privacy risks and presents
IoT easier access for fraud

31

Emergence of big • Big data uses advanced analytics techniques such as

2022 2027P
data analytics machine learning, predictive analytics to analyze data sets

Source(s): Industry reports, Secondary research, Praxis analysis

35
Global FDP market

Banking and FS constitute ~60% of current FDP market; North America will continue to
dominate the FDP market till 2027 while APAC will be the fastest growing region

E-Commerce constituted 22% of FDP market in 2022, Catalyzed by the increasing digitization and GDP per capita,
3rd largest after banking and financial services APAC is expected to maintain the highest growth rate till 2027

FDP market by verticals FDP market by geographies CAGR

In US$ B, 2022 In US$ B, 2022 – 27P 2022 – 27E

22%
31 86
18%
5
8% 3 17%
2% 71
5%
4 22 27%
58 3
22%
4 17
5% 48 2
39 2 3 14 26 21%
31% 31 2 3 11 22
1 2 9 18
7 15
12
10 31 22%
27% 25
17 21
11 14

2022 2022 2023E 2024E 2025E 2026E 2027E

Banking Financial services Insurance
E-commerce Real money gaming Gig economy
Others North America Europe APAC LATAM MEA total

Source(s): Secondary research, Praxis analysis

36
Global FDP landscape

Global FDP landscape is evolving rapidly

Identity verification Chargeback Authentication and

(IDV) protection biometrics

Decentralized identity
services

Bot management
Security, fraud and
compliance

Orchestration1

Note(s): 1. A solution that connects tools producing risk and trust signals to underlying analytics tools, and provide step-up authentication in response; This is not an exhaustive list
of FDP players
Source(s): Industry reports, Company websites, Praxis analysis
37
Government regulations: US & UK

Governments of US and UK have passed key regulations which in turn will

promote the adoption of FDP solutions amongst enterprises
TCPA, CCPA, authentication guidance and KYC mandate are Strong customer authentication, PSD2, GDPR are the
the major regulations passed by the US govt major fraud prevention regulations in UK

Regulations Brief description Regulations Brief description

• Intended to enhance the security of

Telephone
• The TCPA is a federal statute designed to Strong Customer payments and limit fraud during the
Consumer
safeguard consumer privacy by restricting Authentication authentication process
Protection Act
telemarketing communications (SCA) • Companies must provide several different
(TCPA)
methods of authentication for customers

• The CCPA is a state-wide data privacy law • Regulation for electronic payment services
California Second Payment
that regulates how businesses all over the • Intended to make payments more secure,
Consumer Privacy Services Directive
world are allowed to handle the personal boost innovation and help banking services
Act (CCPA) (PSD2)
information of California residents adapt to new technologies

• Encourages FIs to use enhanced

authentication controls, like multi-factor General Data • It is a law that sets guidelines for the
Authentication
authentication (MFA) as single-factor Protection collection and processing of personal
guidance
authentication often results in unauthorized Regulation (GDPR) information from individuals
access

• Identity verification is a critical component of

KYC regulations UK digital identity • This enables people use and reuse their
KYC regulations • Emphasize digital identity verification and attributes digital identities and will unlock improved
methods such as ID document verification and trust framework user experience in the digital world
facial comparison

Source(s): Government websites, Praxis analysis

38
Success factors

Successful FDP SaaS players have advanced machine learning capabilities

and deep data integrations
Success factors Brief description

• Using AI / ML to adapt risk management rules to avoid false positives and decrease “customer insult” rates
Advanced analytics • Proactively predicting a fraudulent behavior by analyzing and profiling physical and behavioral metrics on device
and reporting – Hand positions, geolocations, speed of typing etc. in conjunction with automated document verification and manual approvals for KYCs
• Ability to provide clear reports

• Customized to each phase of the customer journey and transaction channel

Multi-layered solution
approach • Each stage of the customer journey is regarded as a unique interaction, requiring different types of identity verification, data, and solutions to
prevent fraud

• Poorly designed authentication experiences have a disproportionate impact on customer engagement, fraud mitigation, and operational
Seamless customer efficiency
experience • Reducing the number of clicks or screen changes to login or conduct a transaction while sustaining or increasing robustness of security
ensures greater adoption of the FDP solution

Real-time monitoring • Execution of fraud detection algorithms in microseconds instead of relying on databases that give historical identity or transactional data

• Customized models are leveraged based on the phase in customer journey, use case and data, that dynamically alter
– Fraud detection rules
Flexible decisioning – Data fields for analytics
– Thresholds for automatically approving or rejecting an action
– Targeting different touchpoints such as login, signup or withdrawals

• Easy integration in the minimum possible time with a clear understanding of how the FDP tool will integrate with the platform
Ease of integration
• Providing support and training for smooth integration

Digital footprint • Ensure that FDP solution can scan several social media networks, shopping behavior, OTT platforms to get a 360-degree view of users

Efficient partnership • Good network of partners (bureaus, government, channel partners, etc.) to source data that leads to better accuracy of fraud detection

Source(s): Industry reports, Secondary research, Praxis analysis

39
Need for FDP solutions

FDP solutions provide seamless CX, access to large datasets, orchestration

capabilities etc. and hence help in overcoming white spaces across verticals
Key needs White spaces across verticals How can FDP players help?
• Manual verification of identity proofs is both time • FDP solutions reduce the need for manual checks, multiple
consuming and error prone user touchpoints à frictionless authentication and
Seamless customer
• Multiple checks diminishes UX enhanced customers
experience
• Multi-factor authentication can be a cumbersome
process
• Strong API for sourcing large databases from multiple
• Companies across verticals have access to very limited channels (like bureaus, aggregators, telcos)
data and hence, they depend on static approaches ( i.e. • Gather and analyze large volumes of clientele data within
Access to large dataset depends only on historic data)à inaccurate fraud and across industries
detection
• FDP solutions have great orchestration capabilities i.e.
they provide end-to-end complete solutions to the clients
• Lack of end-to-end solutions for monitoring fraud across
the digital customer journey
Orchestration
• Certain industries like banking, insurance, etc. have
capabilities
disparate teams for fraud detection and prevention à
latency • AI / ML expertise to detect and prevent fraud across
customer journey
• Weak transaction monitoring system • Real-time monitoring, behavioral biometrics, device
• Weak identity verification process metrics, keystroke dynamics, predictive analytics are key
Advanced fraud • Static approaches (depends only on historic data) à low
detection techniques used by FDP players to ensure robust security
accuracy
• High false positive rate
• Execution of fraud detection algorithms in microseconds
• Lack advanced techniques to provide real time monitoring with the help of advanced analytics
Real time transaction à longer response time and increased fraud losses
monitoring • Most companies follow post-facto monitoring process

• FDP solutions provide stringent checks for fraud

• Govt is gradually increasing focus towards fraud detection monitoring, complying with all govt regulations; and are
Compliant with and has laid down various regulations like 2-factor rapidly evolving with the industry and govt standards
government regulations authentication, KYC process, etc.

Source(s): Primary conversations, Praxis analysis

40
Key purchasing criteria

The key purchase criteria for a FDP solution are the strength and
customizability of its rule engine, pricing model, and ease of integration
Purchase Customer
Most Sub criteria
criteria rating
important
• Fraud detection accuracy and false positive rate “Single tap logins without any password / OTP
• Machine learning and adaptive capability of the rule but with great security is one of the most
engine required features for us to ensure seamless
Features • Shortest response time customer experience”
• Customizability/configurability
• Chargeback guarantee – Fraud prevention manager, Fintech
• End–to-end solutions or orchestration capability
• Pricing model “Seamless integration of FDP solution with
– Deployment cost our traditional software in the shortest
Cost – Monthly fees or subscription model possible time, without much changes to our
– Micro fees based on API calls existing system and with proper guidelines and
• Free trial and proof of concept training toolkit is quite important for us”
• Frictionless UX – seamless onboarding, frictionless
authentication – Product manager, BFSI
• Ease of usage – search function, logging function,
User experience
flexible data representation
• Ease of maintenance “Our current FDP platform is commonly used
• Ability to streamline operations amongst companies in BFSI industry and also
has great reviews about the accuracy of fraud
• Ease of integration of the FDP platform with existing
Integration and detection and ease of integration, hence we
tech tools
support thought of going ahead with this FDP player”
• Support and training for smooth integration
• Reliability and credibility – Fraud prevention manager, BFSI
Relatively Vendor • Post-sale support Rating
less reputation • Reputation & customer reviews
important • Recommendation from peers Low High

Source(s): Primary conversations, Industry reports, Secondary research, Praxis analysis

41
 Investment trends

Funding in FDP players dropped significantly in 2022, due to the funding

winter globally; plethora of strategic acquisitions happened in FDP space

FDP players raised ~US$ 0.7B funding in 2022; 70%+ Large global FDP players acquire firms to expand their
companies have raised funding in growth stage in 2022 geographical footprints and augment their capabilities
Acq. Acq. price
CAGR Acquirer Target Rationale
Investment influx in FDP players year (US$ M)
2016 - 22
US$ B, 2016 - 22
• To expand its portfolio to AML
and eliminate the need for
2.7 1% 2023 2.7 separate searches across
4% different AML databases and
different watch lists

• To provide customers with

better market insight and
fraud prevention services
2022 515 • It will work on integrating
72% -12% Verisk’s services them into the
1.3 Prama analytics platform
Funding in 2022
1.1 dropped due to the
funding winter • To expand its global footprint
11%
2022 - in digital identity and fraud
0.7 0.7
59%
54%
0.7 prevention
39%
0.5 17% • Midigator's highly automated,
63% data-driven chargeback
51%
24% 5% prevention and management
57% 35% 33% 74%
40% 28% solutions along with Kount’s
22% 2021 640 AI solution will supplement to
3% 10% 9% 5% 2% 1% 9%
Equifax’s bureau capabilities
2016 2017 2018 2019 2020 2021 2022
• To augment its capabilities
Early stage Growth stage Late stage PE stage • To strengthen its offering in
2021 736 Europe and APAC
Deal count • To expand into the US
77 77 80 89 78 79 55
(in #) market

Source(s): Secondary research, Praxis analysis

42
Headwinds and tailwinds

Budget, poor data quality and staffing limitations are the main challenges faced by
FDP players; digitalization and growth in fraud are the major demand drivers

Headwinds / Challenges Tailwinds / Opportunities

Budget / financial restrictions: Developing a FDP solution that Accelerating digitalization: Digital transformation makes
is compatible for different businesses is expensive to implement businesses prone to digital fraud creating a need to deploy
advanced and dynamic FDP solutions
Poor data quality or integration: Integration issue arise when
the quality of data from clients is not standardized High in-house FDP development costs: Developing an FDP
solution in-house is expensive and time-consuming, hence
Staffing / in-house skills limitations: Staff often lack the organizations adopt FDP to speed their time to market and
essential skills needed to develop and implement a FDP solution improve overall CX

Lack of perceived ROI: Absence of expected ROI makes Tech capabilities crunch: Developing an FDP solution requires
investments constrained technical capabilities and talented resources which is a challenge
for most organizations
Data governance and transparency concerns: Maintaining
transparency with the clients makes it challenging for FDP Quick installation and implementation: With the prevalence of
players to share all the data API model, FDP solutions can be quickly implemented

Security risks / vulnerabilities: Clients face security risks as Increasing advanced digital fraud: High volume of modern and
they share their confidential data with the FDP solution more sophisticated fraud need advanced solutions that can
provider identify the nature and origin of fraud in real time

Excessive false positives: Excessive false positives hampers Lack of expertise: Organisations don’t have the awareness and
client’s reputation in front of their users bandwidth to understand advanced digital fraud creating a need
for external expert support

Source(s): Industry reports, Secondary research, Praxis analysis

43
FDP SaaS trends

FDP SaaS players should invest in following capabilities to enhance their

competitive and price advantage in the next 3-5 years
• Real time monitoring of transactions
without the need of manual or document
verification
• Automated KYCs based on an integrated
Frictionless
government portal
authenticatio
n
• Includes capabilities such as
• Collaboration with other cognitive vision, physical analytics
bureaus and behavioral analytics
• Gathering and analyzing large • To advance the accuracy of user
volumes of clientele data within Data Advanced AI gestures, transaction velocity,
and across industries enrichment Features capabilities liveliness tests and image
and recognition
capabilities

• Ability to provide a single integrated

• Leveraging the power of machine
layer to the client while integrating
learning to adapt the fraud
multiple analytical functionalities and
detection rules in real time and
Analytics & Orchestratio data sources across the entire
reduce false positives
decisioning n capabilities customer lifecycle

Source(s): Industry reports, Secondary research, Praxis analysis

44
Agenda

Introduction
FDP overview
Global adoption of FDP
India FDP market landscape

FDP market landscape in Southeast Asia

FDP playbook
Appendix

45
Digital spending trends

Indian enterprises are increasing spending on IT, ~US$ 104 B was the spend
on IT in 2022, with software emerging as the highest growing segment
IT spending in India is estimated at US$ 104 B in Growing number of digital-first businesses and policies
2022, and is expected to reach US$ 160 B in 2027 favoring digital India are driving IT spending in India
CAGR 2x growth in micro businesses actively transacting online
Growing number of •
India’s IT spending 2022 –
digital-first • ~75% mom & pop stores in metros are working towards
27P
In US$ B, 2022 – 27P businesses going online

9% • 67% enterprises spend 4%+ of revenue on IT; ~33%

160 41% earmark >30% of IT budgets for digital spend
Rising technology
3,2 4% adoption
4 • 97% enterprises increased spending on foundational digital
15%
21 technologies – Cybersecurity, Cloud, and Big Data Analytics

9%
104 31 Increasing internet • Internet penetration is growing at a CAGR of ~ 5% in India,
0,6 3 penetration expected to reach 78% penetration by 2027
11 3%
29
20
Initiatives aimed
• Indian govt has rapidly adopted digital platforms for e-
25 towards digital
governance initiatives like UPI, CoWIN, Digilocker, etc.
India
73 10%

45
Growing demand • Rapid increase in the job opportunities in the IT and digital
for professionals sector to drive spending
2022 2027P

• Changing consumer preferences in banking (contactless

Devices Communication Services payments), FS and e-commerce
Evolving consumer
IT Services Software preferences after • COVID triggered digital transformation and legacy
Data Center Systems FDP COVID modernization in India - remote working, automation, AI,
etc.
Source(s): Gartner, Secondary research, Praxis analysis

46
Digital transactions

UPI holds the largest share (~57%) in total digital transaction volume but
constitutes ~15% in digital transaction value owing to low ticket sizes
UPI accounted for ~57% of transaction volumes in Digital retail transactions increased to US$ 7.5T in FY22 as
FY22, followed by debit cards at ~13% compared to US$ 6T in FY21
Non-cash retail transactions – volume share Non-cash retail transactions – US$ Value share
%, FY20 - 22 %, FY20 - 22
35,040M 50,257M 80,437M 5,786B 5,997B 7,479B
2% 0,6% 0,5% 0,8% 0,4%
3% 3% 2%
2% 1% 2%
8% 7% 5% 9%
12% 3% 4% 15%
3% 5%
6%
6% 7% 4%
10%
9% 8%

7%
44% 19% 12%
36%
57% 12%

11% 8%
6%
7% 5% 57%
54% 52%
6%
15% 21%
13%
3% 1% 1%
8% 6% 5%
FY20 FY21 FY22 FY20 FY21 FY22

NEFT CTS Debit card IMPS NACH UPI Credit card M - wallet Others

Note(s): US$ 1 = INR 74

Source(s): NPCI data, Praxis analysis

47
Identity related fraud

Identity-related fraud: Account-related fraud holds a significant share; customer journey

verification, balance between security and CX are the top challenges faced in detecting fraud

Account-related fraud holds ~65% share in financial services and Verification of customer journey and balancing fraud prevention with
~54% share in e-commerce frictionless CX are some of the major challenges in detecting fraud

Identity related fraud distribution by activity Percentage of organizations using data analysis
In %, 2021 techniques
%, 2021

Verification of customer
43%
journey
Balancing fraud prevention
38%
friction
Distribution Purchase transaction
of funds; 35% Emergence of new
of a good service ; 34%
transaction methods
46%
Address Verification 33%

Account Inability to determine

takeover; 33% transaction source / 28%
Account origination
takeover; 29%
23%
Lack of specialized tools

Account Email or device verification 20%

Account
creation; 32%
creation; 25%
Fraud risk assessment by 19%
geography
Financial services E-commerce
Source(s): LexisNexis report (survey of risk and fraud executives N = 418), Industry reports, Secondary
research, Praxis analysis

48
Bank related fraud

Transaction-related fraud: FDP solutions can help in detecting and mitigating transaction-
related fraud in banks; lack of data, frequently changing fraud patterns are key challenges

The highest number of fraud happens in advances (3,800+) Limited data, changing fraud patterns, system integration
followed by cards / internet (3,500+) complexity are some of the key challenges faced by banks
# of fraud Amount involved (in Limited access to data points: Lack of enough historical
Area of operation
(FY22) US$ M, FY22)
data and challenge of richness of data, make blocking
Advances 3839 7353 fraudulent payments complex and lead to high rates of
false positives
Off-balance sheet 21 136
Changing fraud patterns over time à decrease in the
Foreign exchange fraud detection and prevention model’s performance and
7 1
transactions
efficiency
Card / Internet 3,596 20
Incorrect / incomplete data: Non - submission of reports
Deposits 471
by the customers and non-sharing of information à
62
difficulty in integrating data and identifying fraud
Cash 649 12
Complexity in system integrations: Most of the
Cheques / Demand traditional cooperative banks have outdated internal
201 20
drafts etc systems which can’t integrate with new-age AI FDP
solutions
Clearing accounts 16 0.1
Balancing CX and security against fraud: It is important
Others 300 13 to make the process of onboarding smooth and
frictionless to retain customers, while not losing out on
Note(s): Reporting period is FY 2020-21; Data is in respect of fraud of INR 0.1M and above reported during the
period; US$ 1 = INR 79.33
the security
Source(s): RBI, Industry reports, Secondary research, Praxis analysis

49
UPI related fraud

Of the total reported digital payment fraud, ~55% are UPI – related; Half of
the UPI – related fraud are of low ticket size (less than INR 10K)
UPI - related fraud constituted ~55% of the total digital Phishing, vishing, malware, deceptive UPI handles are some
payment fraud in May 2022 of the most prevalent UPI scams
Monthly UPI fraud • Fraudsters send bogus emails to access sensitive
In %, May 2022 Phishing information (password or PIN) of the potential
victim
• Malware is designed to extract and copy data from
the infected device
61K 34K Malware
• It can be mistakenly downloaded from a fake e-mail
Others; 2% More than INR 1L; 2%
E-wallet thefts; 5% attachment or an unsecured website
Voice phishing calls; 9% • Fraudsters contact individuals claiming to be bank
employees, asking for a UPI pin, or requesting to
Internet banking related Vishing
fraud; 12% download a third-party app for verification
Between INR 10K - 1L; 48% purposes

Card related fraud*; 18%

Deceptive • Fraudsters create fake UPI handles on social media
UPI handles to trick people into revealing account details

Remote • Downloading an unverified app from the app store

screen can sometimes result in a privacy breach and data
monitoring leak
UPI related fraud ; 55% • More sophisticated scam in which fraud rings get the
Less than INR 10K; 50%
Money mule
victim's data and then transfer money to an
accounts
intermediary account to store the plunder
• SIM cloning is a recent addition that has proliferated
post the OTP-mandatory rule by banks
SIM cloning
Digital payment fraud reported Avg. ticket size of UPI fraud • A fraudster can even modify the UPI PIN if he/she
Note(s): * Debit / credit card, swapping of mobile phone SIM cards clones the SIM
Source(s): Industry reports, RBI data, Secondary research, Praxis analysis

50
Regulations

Government of India has passed key regulations that is expected to drive

spend on FDP solutions
Regulations / Initiatives Brief description How can FDP solutions help?
• RBI has raised the Additional Factor of Authentication (refers to a pin or an OTP) limit from INR 5,000 • FDP solutions provide various authentication
Two-factor / additional
to INR 15,000 per transaction for e-mandates on cards, Prepaid Payment Instruments (PPIs), and UPI techniques – behavioral, physical authentication,
factor of authentication
for recurring transactions etc.
• Multiple registries like Central fraud registry (CFR), Centralized KYC registry (CKYCR), Central
payments fraud information registry (CPFIR), etc. have been set up for data and fraud – related
• FDP platforms help in comprehensive capturing
Central registries
of data, which enables efficient reporting
information reporting

Mandate for reporting of • Banks need to furnish Fraud Monitoring Return (FMR) in individual fraud cases, irrespective of the • FDP platforms help in easy and real-time data
fraud to RBI amount involved, to RBI electronically within three weeks from the date of detection collection à improved auditability

• Banks are required to constitute a special committee for monitoring and follow up of cases of fraud • FDP platforms have a suite of solutions to detect
Mandate for monitoring fraud involving amounts of INR 1Cr and above exclusively, while the Audit Committee of the Board (ACB) and prevent fraud of all transactions irrespective
may continue to monitor all the cases of fraud in general of its value

Separate department to • The activities of fraud prevention, monitoring, investigation, reporting and awareness creation • Through FDP solutions, fraud department can
manage fraud should be owned and carried out by an independent group in the bank easily and effectively manage and track fraud

• RBI has mandated that all types of loans irrespective of tenor or size need be reported to credit
bureaus • FDP systems aid in the thorough data collection,
Regulatory framework
• The RBI would set up baseline technology standards for DLAs that would strengthen cyber security, enabling effective reporting
data protection and prevent fraud like loan disbursement on stolen identity, data breaches, etc.

• FDP systems will not only provide authentication

KYC process and periodicity • IRDAI has mandated KYC for all insurers with defined documents, process and flows
techniques but will also keep a track of the
of Re-KYC • Periodicity for Re-KYC for low risk and high risk is set to once in 2 years and every year respectively
periodicity for Re-KYC digitally

• FDP systems will aid tracking and generation of

Suspicious transaction report • IRDAI has stressed to put more focus on STR, alerting and understanding money laundering threats
suspicious transaction report

• FDP provides comprehensive third-party data

• Open banking has been promoted with the launch of intermediary AAs (account aggregators),
(open access to consumer banking, transaction,
Open banking initiatives responsible for the customers' consent management à increased financial transparency, reduced
and other financial data from banks, NBFCs) à
fraud with respect to forged documents
improved transparency and richness of data

Note(s): Information as of August 2022

Source(s): RBI guidelines, Industry reports, Secondary research, Praxis analysis 51
Cost of fraud to company varies between 3X and 5X of fraud value in key
verticals; web browser channel accounts for more than 40% of fraud costs in
India
Fraud costs ranges between 3 - 5 times fraud value; Average Web browser channel accounts for the single largest
value of fraud attacks in FS is close to 10x of that in e-commerce source of fraud costs in India

Cost of fraud per unit US$ Avg value of successful fraud attacks1 % fraud costs by channel
loss in transaction In US $ In %, 2021

4,76 38%
6.959 25%
3,18 23%
750 8% 6%

Retail / e-commerce Financial services Retailers / E-commerce Financial services Web browser Mobile In-person at Contact center Others
store / telephone

Distribution of losses by fraud type % fraud costs by mobile channel

In %, 2021 In %, 2021

32% 33% 37%

26% 21%
13% 13% 9% 11% 4% 2%
Friendly / 1st 3rd party identity 3rd party ATO Lost / stolen Fraudulent Mobile web 3rd party Branded Contactless Bill to Text to pay
party fraud theft* merchandise request for return browser mobile app mobile app purchase phone

Source(s): LexiNexis (Survey of N=108 fraud and risk executives across industries), Industry reports, Secondary research, Praxis analysis
Note(s): * Also includes synthetic identity fraud; 1. May increase or decrease based on seasonality; 2. 3rd party apps connect with another service (for payments etc); 3. Branded mobile
apps are created by company to promote its brand and are owned by the company; 4. Contactless purchases are payments use contactless enabled payment terminals (NFC enabled
devices) to complete transactions 52
Emerging trends

Pandemic has accelerated the need for advanced FDP solutions owing to the
increase in exposure to digital fraud

Emerging fraud trends

• Rising online and mobile ecommerce and digital

transactions, especially in tier I and tier II cities, present
Increasing increased vulnerabilities
adoption of
• Card-based transactions (including UPI digital payments • Without the formal checks and verifications
payments linked to debit cards) account
most fraud losses among payment in traditional financial transactions, BNPL
Fraud loss while Growing use of models let criminals using stolen identities to
methods
card / UPI buy now, pay complete small-ticket transactions
• Card-not-present (CNP) and stolen /
payments later (BNPL) • This allows even amateur fraudsters to
lost cards contribute most to card-related
game the BNPL system
fraud losses

• The largest source of fraud charges in India

• Sophisticated fraud like synthetic comes from the web browser channel
More complex Web browsers
identities, multiple device linkages, bot • When compared to mobile web browsers,
attacks, and identity fraud rings are and innovative emerging as a contactless payments, and text to pay,
difficult to be detected from traditional fraud major source of mobile apps account for most fraud charges
verification checkpoints fraud in the mobile channel

Frequent bot
• Bot attacks entail several attempts to take over accounts attacks
using stolen identities and credit cards, usually from
databases on the dark web

Source(s): Lexis Nexis India report (survey N = 108), Industry reports, Secondary research, Praxis analysis

53
India > FDP market size

FDP TAM was US$ 1.5B+ in 2022 and is growing at a CAGR of 37%; FDP SAM market was US$
550M+ in 2022 and is expected to be US$ 3,068M by 2027, growing at a CAGR of ~41%
FDP TAM stood at US$1.6B in 2022 and Rising digitization, govt. initiatives aimed
BFSI hold the largest share (73%)
is expected to be US$ 7.6B+ by 2027 towards increasing security driving
followed by e-commerce (24%)
adoption
Growth
Details
FDP TAM split across industries, TAM by solution model in India factor
solution types US$ M, 2022 - 27P CAGR
• India’s IT spending is expected to reach US$
%, 2022 2022 – 27P 160 B in 2027, growing at a 9% CAGR
Increasing
digitization • Spend on SaaS is expected to increase at
Total FDP TAM: US$ 7,672 37% the highest rate of 16% between 2022-27
1,591M
Gig economy;…
Evolving • COVID triggered digital transformation
Real money consumer and legacy modernization in India - remote
gaming; 2% preferences working, focus on automation, AI,
E-commerce; Outsourced; 35% 3.068 41% post COVID cybersecurity etc.

24%
• Regulations like 2-factor authentication,
Insurance; 8% Govt Central fraud registry (CFR) and data
initiatives privacy policies to augment the adoption of
FDP solutions in India

• Businesses across sectors are taking a

digital route to growth
Banking and Growing
Inhouse; • 2x growth in micro businesses actively
financial services; 1,591 number of
65% 4.604 transacting online
65% 35% digital-first
businesses • Digital-first businesses allowing consumers
557 to transact online, will require to develop
FDP solutions in the near future

1.034
• Internet penetration is growing at a CAGR
Increasing of ~ 5% in India, expected to reach 78%
Industry Solution type 2022 2027P internet penetration by 2027
penetration • Increasing deployment of Fibernet and
Inhouse Outsourced internet lines in rural India

Source(s): Industry reports, Primary conversations, Secondary research, Praxis analysis

54
India > FDP market size

Total FDP SAM stood at US$ 570M+ in 2022 and is projected to be ~US$
3,152M by 2027, growing at a CAGR of 41%
Total addressable FDP market in India was US$ 1.5B+
whereas the FDP SAM was US$ 570M+ in 2022

CAGR
What it means? 2022 2027P
2022 - 27P

Total addressable FDP market, • Total FDP addressable market

(TAM) includes:
US$ M - In-house FDP spend
1,591 7,672 37%
Identity verification (IDV) market - Out sourced spend (SaaS
size + Transaction monitoring and Products and services)
market size - Potential to monitor fraud,
but currently not doing so

Serviceable
addressable
market,
US$ M • Serviceable addressable FDP
Out-sourced market (SAM) includes: 572 3,152 41%
market - Out sourced spend (SaaS
and Products and services)

Source(s): Industry reports, Primary conversations, Secondary research, Praxis analysis

55
Digitalization trends

Indian consumers prefer transacting online or through mobile, with internet

penetration increasing to 78% by 2027
Internet users are expected Digital payments are expected to Expanding digital commerce, adoption of digital
to reach 1,144M in 2027 grow at a CAGR of 74% b/w 2022-27 native products leading to increase in digitalization

• Digital commerce – both eCommerce and m-

# of internet users in India Digital payments in India commerce – is estimated to expand significantly
Expanding
# M, 2022 - 27P # B, 2022 - 27P digital • eCommerce expected to grow at 35-40% CAGR
commerce and m-commerce clocking 25-27% CAGR through
78% 2025
• India’s new middle class will seek more digital-
Adoption of native and personalized products and services, will
digital native drive digital payments
CAGR
62% ~ 5% products • Reduced cost of mobiles, ease of use and increased
value is driving consumers to buy digital devices
• Internet penetration is growing at a CAGR of ~ 5%
Increasing in India, expected to reach 78% penetration by
CAGR 2027
internet
~ 74%
penetration • Increasing deployment of Fibernet and internet lines
in rural India
1.144 1.943 • Regulatory sandboxes by RBI to innovate on low-
879 cost, mass-inclusion solutions will be a big boost to
Regulatory digital payments
changes
• Govt’s drive to control voice and data costs –
emergence of 5G
122
Facilitation • Basic services like bank account opening,
2022 2027P 2022 2027P of ease of transferring and receiving money, company
availing registration, media consumption now happens on
% Internet penetration services mobile easily – driving demand for digitization
Note(s): World bank data has been leveraged while taking population estimates; 1. EFT: Electronic Fund Transfer
Source(s): RBI, World bank, NASSCOM, Secondary research, Praxis analysis

56
Industry – wise FDP models

Companies in Banking and financial services, Insurance and Gaming sectors

typically develop in-house FDP solutions
Banking and financial
Insurance E-commerce Gaming Cryptocurrency Gig economy
services
• Email intelligence • Web authentication • Device • WebAuthn • Behavioral • Behavioral
• Phone intelligence • Frictionless intelligence • Frictionless biometrics biometrics
• Document authentication • Purchase / authentication • WebAuthn • OCR
verification • OCR, face match, Affluence • Document • Document • Trust network
Capabilities name match intelligence verification verification
• Behavioral • Device
biometrics • Email, phone and • Document • Face match • Device intelligence fingerprinting
device intelligence verification
• Orchestration • Orchestration • Sections
• Device fingerprinting • Device fingerprinting intelligence
• User authentication • User authentication • RTO • User • User • User
• Document validation • Document validation predictions authentication authentication authentication
• User risk profiling • User risk profiling • Returns • Document • Document • Document
prediction validation validation validation
• AML monitoring • Agent abuse
Use cases • Chargeback • User risk profiling • Fake accounts • Account takeovers
• Account takeovers • Account takeovers prevention • Fake accounts • Account takeovers • Promo abuse
• Self - service • Self - service • AML
onboarding onboarding • Account takeovers • Self - service • Self - service
monitoring onboarding onboarding
• Self - service
onboarding

Native product capability

In-house

API Call - SaaS driven

Outsourced integration
services
Rating
Source(s): Industry reports, Secondary research, Praxis analysis

Low High
57
Banking and financial services and e-commerce are the most vulnerable
industries with respect to fraud attacks
Cost of fraud per unit US$ loss in transaction with respect to spend on FDP
2022

8x

7x Real money gaming, 11

Cost of fraud per unit US$ loss in

6x
Gig economy, 6
7x Banking and financial
transaction

services, 372
5x

4x
E-commerce, 137
3x
Insurance, 46
2x

1x

1 2 3 4 5

Vulnerability score
Note(s): *Vulnerability score (on a scale of 0 to 5) is estimated basis parameters like the number of touchpoints
susceptible to fraud attacks, number of active users, impact of regulation, etc. SAM of FDP for respective industries (in US$ M)
Source(s): Primary conversations, Secondary research, Praxis analysis

58
 Investments and acquisitions

Several FDP companies have raised funding since April 2020; capabilities
enhancement is one of the prime reasons for strategic acquisition of FDP players

Multiple investments can be seen in FDP players since April Large players acquire FDP firms to enhance their
2020; Perfios has raised US$ 77M+ funding in last two years capabilities and to enrich their existing portfolio
Acq.
Key investments in FDP players Acquirer Target Rationale
year
Apr’20 – Mar’22, US$ M
• To bolster its approach to
providing a comprehensive
platform for financial
77
2022 institutions – a fully
integrated technology
15 9 8 0,5 stack, including identity
and onboarding services
Perfios Idfy Authbridge signzy Drona

Founding year 2007 2011 2005 2015 2021 • To strengthen its lending-
2022
Total funding focused product offerings
151 21 10 13 0.5
(US$ M)

Last funding
Series C Series D Series B Series A Seed
stage
• To expand advanced bot
2019
protection capabilities
• Gaurav
Key investors • I
Samdaria
• Infinite • To improve its cloud
• Omkar Leaseworks
Shirhatti security portfolio
• Anantroop 2019 • To enhance anti-bot and
• Alok Financial
Kumar Advisory fraudulent traffic
protections

Source(s): Industry reports, Secondary research, Praxis analysis 59

Tech capabilities and partnerships

FDP SaaS players focus largely on product development by building their tech
stack and partnerships with IT service providers
Advanced AI / ML, biometrics, real-time monitoring, FDP players develop efficient partnership network for
blockchain are key components of FDP products sourcing data and detecting and investigating fraud

• Bank Secrecy Act (BSA) engines -

Automated bank statement analyzers to Detection and
AI powered KYC Data acquisition
detect and prevent fraudulent activities investigation
while onboarding
• Combine physical and behavioral • Government (for RBI • Technology partners
Multi-factor biometrics like hand geometry (hand database)
authentication gesture and movements), keystroke • Telcos (for IT proofing)
and biometrics analysis, etc. to create a robust security • Bureaus
solution using AI
• Cloud services
• Aggregators like
Real-time • Advanced real-time transaction website builders • Email intelligence
monitoring monitoring and instant notification
service provider
• Global data partners
• Blockchain contains digital assets
Blockchain including documents that are secured via
technology powerful cryptographic keys, hence
making it more secure
• FDP players use predictive analytics to
Predictive detect potential security threats and to
analytics establish patterns in high-crime areas,
among other activities
Source(s): Primary conversations, Industry reports, Secondary research, Praxis analysis

60
Headwinds and tailwinds

Frictionless CX with robust security, unavailability of data are the main challenges faced
by FDP players; digitalization, growth in fintech startups are the major drivers

Headwinds / Challenges Tailwinds / Opportunities

Balancing speed of detection with customer friction: Accelerating digitalization: Internet users in India are
Offering a robust security solution with minimum 879M+ in 2022 and are expected to cross 1,144M by
customer friction is a challenge 2027. Digital payments are increasing dramatically from
122B in 2022 to 1.9T+ in 2027, growing at a CAGR of
Lack of quality data to support analysis: Data 74%
quality is a challenge, specifically with respect to
customers and transactions à inefficient monitoring 2100+ fintech companies in India which are one of the
mechanisms largest adopters of FDP solutions à greater opportunity
for FDP players
Creating awareness regarding fraudulent activities.
Companies focus on KYC compliance but not on Lack of expertise in different types of fraud: fraud are
fraud management becoming a more complex and sophisticated à need
for external expert support in identifying and preventing
Heavy investments into AI / ML training and tuning
Tech capabilities crunch: Handling and developing a
models
FDP solution requires technical capabilities and talented
resources which is a challenge for most organizations à
Security risks: Clients are reluctant to share their greater potential for FDP players
confidential data with the FDP solution provider.
Building relationships and trust is a challenge for FDP Government regulations like authentication mandates,
players KYC, etc. are driving the adoption of FDP solutions
Source(s): Primary conversation, Industry report, Secondary research, Praxis analysis

61
 Key purchasing criteria

High fraud detection accuracy, real-time monitoring, and ease of integration

are the key criteria influencing the purchase of FDP solutions
Customer
Most Purchase criteria Sub criteria
important rating
• Fraud detection accuracy “For our company, real-time tracking of
• Real-time tracking of transactions with transactions and blocking fraudulent
automated decisions transactions when identified is a very
• Shortest response time important feature. Automated decisions by
Features the platform is an also important factor.”
• Customizability / configurability
• Chargeback guarantee
• End–to-end solutions or orchestration capability – Fraud prevention manager, E-commerce
• Ability to handle the scale of transactions
“We integrated with an FDP SaaS product to
• Pricing model introduce of multifactor authentication (MFA)
– Deployment cost with integrated biometrics to ensure the user
Cost – Monthly fees or subscription model account is not hacked or used by others
– Micro fees based on API calls without user consent”
• Free trial and proof of concept
– Product manager, BFSI
• Ensuring customer education and awareness
through meaningful SMS and emails sent at “Fraud detection is a new area for us; hence
User experience
regular intervals to mitigate customer
we did our background research to find the
vulnerability
best FDP tool in the market by
• Ease of integration of the FDP platform with recommendations from our colleagues and
Integration and
existing tech tools other industry players”
support
• Support and training for smooth integration
• Reliability and credibility – Product manager, E-commerce
Relatively Vendor • Post-sale support Rating
less reputation • Reputation & customer reviews
important Low High
• Recommendation from peers

Source(s): Primary conversations, Industry reports, Secondary research, Praxis analysis

62
FDP landscape

FDP landscape is evolving rapidly in India

Identity verification Chargeback
Bot management
(IDV) protection

Authentication and
biometrics

Orchestration1

Note(s): 1. A solution that connects tools producing risk and trust signals to underlying analytics tools, and provide step-up authentication in response; This is not an exhaustive list
Source(s): Industry reports, Secondary research, Praxis analysis

63
Case study: Bureau

Founded in 2020, Bureau offers end-to-end risk compliance, and identity

management solutions for businesses [1/2]
Overview
Founded Total funding
Headquarters 60+ US$ 16.2M
Offers risk compliance, and identity
2020 San Francisco Employees management solutions for businesses
(Series A)

Funding timeline Strengths Platform features

• Identity and risk orchestration to No code Customized workflows from

automate every onboarding, transaction, workflows hundreds of data sources
Aug-20 US$ 4.2M Seed funding raised by
and fraud-risk decision
Blume ventures, Village Global
Ready-to-go templates catering
• Workflows for user journey mapping and Templates to different industries and use
control with all the data and building cases
blocks
Data Generate complicated insights on
US$ 12M Series A funding led by • AI-powered business rules engine to define
Dec-21 ingestion the platform using bulk uploads
Quona, Commerce Ventures, Okta, business logic and determine outcomes
Mark Britto, Bobby Mehta
Rules Advance AI-based engine to
• Bureau platform facilitates multiple
vendor management under one roof, thus engine deploy complex business logic

Key highlights reducing the tool debt

Case
Review flagged cases and manage
50m+ 500+ $300m+ • Global coverage from day 1 to support manageme
compliance
Verified Risk Commerce
multi-geography operations nt
Identities Signals Protected
• Reduced manual reviews and streamlined
50m+ 80+ compliance and audits
Reports
Granular insights to enhance fraud
detection & promote real-time
API Calls API
responses
Note(s): Information as of Nov 2022
• Easy integration with any tech stack that
Source(s): Company websites, Secondary research, Praxis analysis requires sparse tech bandwidth

64
Case study: Bureau

Founded in 2020, Bureau offers end-to-end risk compliance, and identity

management solutions for businesses [2/2]

Types of use cases

AML and Transaction

User onboarding KYC Risk management Fraud prevention
compliance monitoring

Robust risk Stay compliant Keep a watchful Assess users at Monitor account Stop fraudsters
assessment at with government eye on the parking every stage in activity and before they can
onboarding using regulations and of illicit funds and their customer transactions to abuse the system
Bureau’s rich make better- stay compliant journey to make flag suspicious and result in
persona, KYC, informed informed decisions activities financial and
device, and decisions about reputational loss
behavior insights your users

Note(s): Information as of Nov 2022

Source(s): Company websites, Secondary research, Praxis analysis

65
Case study: Idfy

IDfy is a series D funded FDP player headquartered in Mumbai, with a

revenue growth of 70% between FY19 - 22
Founded Headquarters Total revenue Total funding Offerings
2011 Mumbai US$ 7.8M (FY22) US$ 21M Offers tools for identity
(Series D) verifications, BGV

Funding timeline Strengths Key solutions / services

• Proprietary systems are built on the latest in Solution /

Details
machine-learning based anomaly service
US$ 107K Seed round led by Blume detection, machine vision, and identity
Dec-13 • Ensure that the client has the
Ventures authentication techniques
Customer right customers and they are
US$ 2.86M Seed round led by New verification onboarded in the fastest way
• Company is currently serving 200 clients
Mar-15 enterprise associates, Blume possible
across financial services
ventures
• Help build honest and high
US$ 599K Venture debt financing Financials performing teams by preventing
Employee
Aug-16 round led by Trifecta capital identity and employment fraud
Revenue verification
advisors through accurate and reliable
US$ M, FY19 - 22
employee verification
US$ 3.13M Series A round led by New
Dec-17 • Ensure that the client’s service
enterprise associates, NB ventures
Partner partners are comprehensively
CAG verification verified and onboarded in the
US$ 2.14M Series A round led by R shortest time possible
Aug-20 70%
New enterprise associates
• Help in onboarding merchants
7,8 Merchant from remote corners while
US$ 12.5M Series D funding raised by 5,2 onboarding validating their business identity
Sep-21
Blume ventures and TransUnion 3,1 and proofs instantly
1,6
Video KYC • Makes remote onboarding safe
FY19 FY20 FY21 FY22
Note(s): Information as of July 2022
Source(s): Industry reports, Company websites, Secondary research, Praxis analysis

66
Case study: Clari5

Clari5 offers cross-channel fraud management platform for banking

enterprises
Founded Headquarters Total revenue Total funding Overview
2006 Bengaluru US$ 5.7M (FY21) US$ 4M Offers a cross-channel fraud management
(Series A) platform for banking enterprises

Funding timeline Strengths Type of solutions / technologies / services

• Real-time, cross-channel platform offering Solution /

Details
bottom - line protection (losses from fraud) service
Mar-11 US$ 376K Angel funding raised by and topline growth (cross - sell / upsell)
• Extreme real-time, cross channel
Sachin Hegde Enterprise
Enterprise Fraud management to
• Capability to process 10B+ transactions and fraud
detect and prevent sophisticated
manage 450M+ accounts management
internal and external fraud
US$ 3.09M Series A round led by
Jun-11 • With 200M accounts at a single site, it has the
JAFCO Asia • End-to-end AML platform with
world's largest implementation of a fraud Suspicious activity monitoring,
management solution Anti-Money
customer risk categorization,
Laundering
entity identity resolution, watchlist
US$ 374K Series A round led by
Jan-14 Financials filtering
JAFCO Asia
Revenue • Unified, comprehensive, ready-to-
US$ M, FY20 - 21
Payments
deploy, single-point regtech
fraud
US$ 301K Series A round led by
platform for end-to-end
Jul-15 reporting
automated payments
M&S partners
CAG
Customer • Extreme real-time, cross channel
R 2%
experience contextual insights to target
Jan-17 US$ 77.3K Conventional debt round 5,7 management customers for cross-sell and upsell
led by Ashutosh Vaidya
• Minimise risk exposure with a
5,6 Identity real-time, unified customer view
resolution across all lines of businesses and
FY20 FY21 products
Note(s): Information as of July 2022
Source(s): Industry reports, Company websites, Secondary research, Praxis analysis
67
Case study: Signzy

Founded in 2015, Signzy offers a range of services like video KYC, fintech APIs,
deep user analytics among other advanced features
Overview
Founded Headquarters Total revenue Total funding Offers tools for customer verifications,
2011 Mumbai US$ 4.7M (FY22) US$ 12.6M employee verifications, user verifications,
(Series A) partner verification

Funding timeline Strengths Type of solutions / technologies / services

• Harnesses the latest technologies in AI to

perform comprehensive identity verification Solution /
Details
US$ 8.73K Seed funding raised by using liveliness checks, image forensics, face service
Feb-16
North facing realtech matching, and a randomized set of
questions • Liveliness check through
Video KYC assisted videos and face match
Nov-16 US$ 17.5K Angel funding raised by selfies
Chinmay Bosale, Kunjal Jadhav • Signzy video KYC solution has matured over
dialects, browsers and low-internet • Multi-fraud control using 100s of
scenarios Fraud data points including document
US$ 613K Seed round led by Kstart,
Feb-17 Financials checks forgery, mobile, email, IP
SAP, Contrarian Drishti Partners validation
Revenue
US$ 3.6M Series A round led by US$ M, FY19 - 22 • Comprehensive pre integrated
Nov-18 Kalaari Capital, Stellaris Venture Fintech
API stack of over 240+ APIs
Partners APIs
across financial use cases
CAG • Getting deep insights into
Oct-20 US$ 5.4M Series A round led by R
Deep user customer behavior by intelligent
Akram Ventures, Unitary fund 62%
analytics tracking of relevant current
US$ 3.07M Series A round led by 4,7 and historical data
Dec-20 Vertex Ventures, SAP, Kalaari 2,8 Enterprise • Customers can manage their
Capital 1,8
1,1 Grade own data, privacy, security,
security storage and retrieval
FY19 FY20 FY21 FY22
Note(s): Information as of July 2022
Source(s): Industry reports, Company websites, Secondary research, Praxis analysis
68
Case study: HyperVerge

Founded in 2014, HyperVerge offers ID verification, video KYC, face

authentication and de-duplication in different industries
Overview
Founded Total funding
Headquarters 150+ US$ 1M
A B2B SaaS company providing AI-based
2014 Bangalore Employees identity verification/ KYC solutions to
(Seed) enterprises in Fintech, Gaming, Crypto etc.

Product suite Marquee clients Value propositions

Product Details Value prop. Details

Seamless • Reduce the time customers spend

• Enables onboarding users
customer verifying their identities, reducing
instantly across the globe with onboarding the drop-offs during the process
IDV high accuracy AI models for
liveness detection, face-match & • Better automated approval rates
Increase
ID verification for identity checks to reduce the
approval
time and cost spent on manual
rates
• Enables onboarding users verifications / reviews
remotely with very high Strengths
• Streamline the onboarding process
Video KYC confidence over video, with or Increased
for a better customer experience
without assistance from an • Reduced customer drop-offs: Helps reduce conversion
and increased conversion
agent
drop off rates to the tune of 50%
• Protect the company’s reputation
• Enables authentication of
• Single image passive liveness technology: Agent Fraud by eliminating fraud & preventing
Face repeat users & transactions
Enables to convert more users by improving Prevention fraudulent agents from entering
authenticati instantly and helps deliver a
CX and verifying liveness with just a selfie and the system
on better customer experience
while preventing fraud without any complex gestures or videos Face • Verify agents and delivery
authenticatio executives in an instant using face
• Seamless integration and fast deployment: n authentication
• Fool-proof system to detect
Face de- Integrating is a hassle-free activity with Web
synthetic identity fraud in milli- and Mobile SDKs with low-code workflow, • Ensure good behaviour from users
duplications Reward good
seconds
saving developers’ time and enables going live by identifying bad actors and
users
within hours rewarding good ones
Note(s): Information as of July 2022
Source(s): Industry reports, Company websites, Secondary research, Praxis analysis
69
Agenda

Introduction
FDP overview
Global adoption of FDP
India FDP market landscape
FDP market landscape in Southeast Asia

FDP market landscape in Singapore

FDP market landscape in Indonesia
FDP market landscape in Malaysia
FDP market landscape in Vietnam
FDP market landscape in Thailand
FDP market landscape in Philippines
FDP playbook
Appendix

70
 SEA > Overview

Internet users are expected to be 527M by 2027; digital transaction value was
~US$ 186B in 2022 and is expected to be ~US$ 379B by 2027
Smartphone users are expected to cross 526M Internet users are expected to reach 527M by Digital transactions value is expected to cross
by 2027, growing at a CAGR of 3% 2027, growing at a CAGR of 3% US$ 350B by 2027

Smartphone users Internet users Value of digital transactions in

In M, 2022 - 27P In M, 2022 - 27P Fintech
In US$ B, 2022 - 27P

CAGR CAGR
~3% ~3%

CAGR
~15%

526 527
445 454
379

186

2022 2027P 2022 2027P 2022 2027P

Note(s): Only 6 countries are considered in the SEA region – Singapore, Indonesia, Malaysia, Thailand, Vietnam, Philippines
Source(s): Statista, Secondary research, Praxis analysis

71
 SEA > Overview

Of the total ~36B digital transactions witnessed in SEA region, 75%+

transactions are through mobiles; fraud attack rate is ~1.5%
Digital transactions volume in SEA is expected More than 75% transactions take place via Even though majority of transactions are via
to reach 77B by 2027 mobiles; attack rate in SEA is ~1.5% mobile, ~58% fraud attacks are via desktop

Volume of digital transactions Transaction volume by channel and Fraud volume split by channel type
In B, 2022 - 27P attack rate In %, 2022
In %, 2022

~ 36B transactions (in 2022) ~ 540M fraud attacks (in 2022)

Mobile app; 12%

CAGR
16%

Mobile browser; 30%

Mobile app; 62%

No fraud
77 attempts; 98,5%

Mobile browser; 14% Desktop; 58%

36

Desktop; 24%

Attack rate; …
2022 2027P Volume of transactions Volume of transactions Volume of fraud attacks
Note(s): Only 4 countries are considered in the SEA region – Singapore, Malaysia, Thailand and Philippines
Source(s): ACI Worldwide, GBG, LexisNexis global report, Secondary research, Praxis analysis

72
SEA > Fraud loss

Synthetic identity, friendly fraud, and account takeover account for ~70%
fraud losses across customer journey
Fraud costs are dominated by purchase Fraud costs are dominated by purchase Synthetic identity and friendly fraud losses
transactions in financial services transactions in e-commerce constitute more than 55% of total losses

Fraud costs Cost of fraud for Fraud costs Cost of fraud for Distribution of losses by fraud type
by customer unit dollar lost in by customer unit dollar lost in In %, 2022
journey stage transaction journey stage transaction
N = 387
In %, 2022 In US$, 2022-27P In %, 2022 In US$, 2022-27P

CAGR 15%
CAGR ~4% 14% 16%
~4% 17%
24%
12% 14% 13%

13% 13%
13%
53%
51% 27%
6,4 4,3 28% 29%
5,2 3,6

30% 32% 28% 29%

25%

Financial services 2021 2026P E-commerce 2021 2026P New cccount Transactions Account login
Account login
creation
Account login Financial services E-commerce Lost / stolen merchandise Fraudulent request for return / refund
Transactions Transactions
3rd party account takeover Friendly / 1st party fraud
New account creation New account creation 3rd party / Synthetic identity fraud
Note(s): Only 4 countries are considered in the SEA region – Singapore, Malaysia, Thailand and Philippines
Source(s): Statista, LexisNexis industry report (Survey of N = 387 risk and fraud executives), Secondary research, Praxis
analysis 73
SEA > FDP market size

Of the total US$ 1,379M addressable FDP market, ~US$ 398M is the
serviceable addressable FDP market
FDP SAM was ~US$ 398M in 2022 and Rising online digital applications, shift to
FDP TAM was ~US$ 1,379M in 2022 and digital payments are the top growth
is expected to be ~US$ 2,547M in 2027 is expected to touch US$ 900M in 2027
drivers
FDP TAM FDP SAM Growth factor Details
US$ M, 2022 - 27P US$ M, 2022 - 27P
Rise in online • Adoption of online digital
digital applications are driving the
applications and growth for fake websites and
services mobile application

CAGR CAGR Adoption of • Digital payments and touchless

~ 13% ~ 18% digital financial transactions have also
payments and increased the points of
NFC technology vulnerabilities

894
2.547 • Connected devices collect,
Adoption of
transmit, and store various
digitization and
consumer data creating privacy
IoT
risks and giving access to fraud
1.379
398
• Big data analytics uses advanced
Increasing analytics techniques like AI and
sophistication of ML, allowing organizations to
big data proactively detect and prevent
analytics fraud across multiple digital
2022 2027P 2022 2027P channels

Source(s): Primary conversations, Industry reports, Secondary research, Praxis analysis

74
SEA > FDP market size

Among SEA countries, Indonesia has the maximum FDP TAM followed by
Thailand
Indonesia (~US$ 491M) held the largest share of total SEA Indonesia (~US$ 139M) constituted ~35% of the total SEA
FDP TAM followed by Thailand (~US$ 293M) in 2022 FDP SAM in 2022

FDP TAM FDP SAM

US$ M, 2022 US$ M, 2022
1,379

398

491

293
139
197
146 139
112 74
48 48 51
39

Overall Singapore Indonesia Malaysia Thailand Philippines Vietnam Overall Singapore Indonesia Malaysia Thailand Philippines Vietnam

Source(s): Primary conversations, Industry reports, Secondary research, Praxis analysis

75
FDP players – Headwinds and tailwinds

IL
Fragmented data and inadequate data standardization are the main challenges

LU
whereas increased FDP investment and digitalization are the major opportunities

ST
R AT
IV
E
• Organizations are looking at future-proofing fraud prevention through investment in fraud detection technologies
Increase in investment
budget for FDP • As the number and maturity of FDP vendors increase, adoption of external services and products for fraud
prevention is expected to increase, especially among the internet and digitally native companies
Opportunities / Tailwinds

• Banks and financial services companies have increased their use of internet and mobile apps for customer
Migration to digital solutions onboarding and unless advanced methods of fraud prevention are used, digital fraudsters can target inherent
for onboarding and vulnerabilities using stolen ids, and device hacking
transaction monitoring • A fraud is typically detected several weeks later, leading to significant increase in investigation efforts and time to
recover lost money

• Digital payments in SEA stood at 36B in 2022, expected to reach 77B in 2027, growing at a CAGR of 16%
Increasing digitization • Increased use of digital wallets, emergence of fintech apps and adoption of digital payments will require robust
FDP solutions

• E-commerce growth rates in SEA countries is expected to be ~20%, which are largely led by verticalized and B2B
Increasing e-commerce
ecommerce and D2C brands, those that do not have the required awareness, focus, technology infrastructure or
growth
spend capability on FDP

• Large proportion of data resides in disparate legacy systems, increasing the number and cost of APIs required to
Challenges / Headwinds

Fragmented data
collate and analyse data

• A common challenge among organizations is not having a cohesive view of the customer journey through
Lack of 360 degree customer
acquisition, onboarding, usage and transactions, which limits the analytical strength to proactively detect fraud and
view
create the alert

• Almost 50% of adults in Southeast Asia do not have access to any banking services, limiting the volume of digital
Unbanked population transactions in the short term; however increasing digital penetration in the region is expected to significantly
reduce this number in the medium to long term
Source(s): GBG and The Asia Banker (Survey of N=324 financial institutions), Primary conversations, Industry reports, Secondary research, Praxis
analysis

76
 Key purchasing criteria

The key purchase criteria for a FDP solution are the accuracy, pricing model,
ability to handle a large volume of transaction, and ease of integration
Customer
Most Purchase criteria Sub criteria
important rating
• Fraud detection accuracy and false positive rate
“Our primary aim was to decrease the false
• Real-time tracking of transactions with
positives while not compromising on the fraud
automated decisions
detection accuracy. We have successfully
• Shortest response time
Features 80 – 100% achieved this post the deployment of our
• Customizability / configurability
current FDP solution”
• Chargeback guarantee
• End–to-end solutions or orchestration capability – Product head, E-commerce
• Ability to handle the scale of transactions
• Pricing model
– Deployment cost “We needed custom FDP solutions specific to
Cost – Monthly fees or subscription model 70 – 100% our existing model and use cases. We wanted
– Micro fees based on API calls the FDP solution to be well integrated with
• Free trial and proof of concept our model without hampering any ongoing
• Ensuring customer education and awareness operations / processes”
through meaningful SMS and emails sent at
User experience 50 – 75% – Product manager, Insurance
regular intervals to mitigate customer
vulnerability
• Ease of integration of the FDP platform with
Integration and
existing tech tools 40 – 55% “Being one of the leading banks, we need a
support
• Support and training for smooth integration FDP solution which can manage a large
• Reliability and credibility
transactional dataset in real-time with
maximum possible accuracy”
Relatively Vendor • Post-sale support
40 – 50%
less reputation • Reputation & customer reviews
– Fraud detection dept, Leading bank
important • Recommendation from peers

Source(s): Primary conversations, Industry reports, Secondary research, Praxis analysis 77

Agenda

Introduction
FDP overview
Global adoption of FDP
India FDP market landscape

FDP market landscape in Southeast Asia

FDP market landscape in Singapore

FDP market landscape in Indonesia
FDP market landscape in Malaysia
FDP market landscape in Vietnam
FDP market landscape in Thailand
FDP market landscape in Philippines
FDP playbook
Appendix

78
Singapore > Smartphone and internet
penetration

Smartphone users and internet users are expected to reach ~5.4M and ~5.5M
respectively by 2027
Smartphone users are expected to reach ~5.4M by 2027, Internet users are expected to reach ~5.5M by 2027,
growing at a CAGR of 2% growing at a CAGR of 2%

Smartphone users Internet users

In M, 2022 - 27P In M, 2022 - 27P

CAGR
~2% CAGR
~2%

5,5
5,4 5,1
5,0

2022 2027P 2022 2027P

Source(s): Statista, World bank, Secondary research, Praxis analysis

79
Singapore > Digital transaction landscape

Digital transaction volume to reach ~3.1B by 2027; credit cards accounted for
~30% of the total digital transactions in 2021
Digital transactions value is expected to Digital transactions volume is expected to More than 50% digital transactions happen
increase to ~US$ 46B by 2027 reach ~3.1B in 2027 through credit and debit cards collectively

Value of digital transactions in Volume of digital transactions Transaction volume across payment
Fintech In B, 2022 - 27P Credit and debit card methods
In US$ B, 2022 - 27P transactions constituted In %, 2021
54% of the volume N = 121

29%
CAGR
~10% 25%
CAGR
~22% 22%

15%
46 13%
3,1

1,9

17
3%

2022 2027P 2022 2027P Credit Debit Mobile/ Direct Traditional BNPL
cards cards Digit deposit Apps
wallet
Source(s): Statista, ACI worldwide, LexisNexis industry report (survey of N = 121 fraud and risk executives across industries), Secondary research,
Praxis analysis

80
 Singapore > Fraud costs

Fraud costs banks and financial services 5X the value of fraud which is largely
contributed by transactions
Cost of fraud for unit amount lost in transaction Fraud costs across customer journey is Synthetic identity and friendly fraud losses
is more than US$ 5 in FS dominated by purchase transactions constitute more than 55% of total losses

Cost of fraud for unit amount lost in Fraud costs by customer journey Distribution of losses by fraud type
transaction stage In %, 2021
In US $, 2021 In %, 2021 N = 121
N = 121
N = 121
11% 13% 13%

13% 13%
13%

30% 30%
18% 18%
18%

25%
38% 41% 28% 28%
5,09

3,27
32% 28%
32% 29% 27%

E-commerce Financial services Financial services E-commerce New cccount Transactions Account login
creation
APAC avg. New account Transactions Account login Lost / stolen merchandise
3.56 5.24 creation Fraudulent request for return / refund
(US$) 3rd party account takeover
Friendly / 1st party fraud
3rd party / Synthetic identity fraud
Source(s): Statista, LexisNexis industry report (survey of N = 121 fraud and risk executives across industries), Secondary research, Praxis
analysis

81
Singapore > FDP market size

Of the total US$ 112M addressable FDP market, ~US$ 48M was the
serviceable addressable FDP market in 2022
FDP TAM was ~US$ 112M in 2022 and is FDP SAM was ~US$ 48M in 2022 and is High internet penetration, shift to digital
expected to be ~US$ 208M in 2027 expected to be ~US$ 99M in 2027 channels are the top growth drivers

FDP TAM FDP SAM Growth factor Details

US$ M, 2022 - 27P US$ M, 2022 - 27P • Internet penetration in
Singapore is more than 90%
High internet
resulting in higher volume of
penetration
digital transactions across
channels
• Pandemic has accelerated the
CAGR CAGR adoption of digital banking
~ 13% ~ 15% and contactless payments à
Shift to digital sharp increase in fraud
channels attacks
• Digital payments volume is
expected to cross 3B by 2027

99 • The Monetary Authority of

208 Singapore (MAS) and the
Government Association of Banks in
regulations Singapore (ABS) is adopting
measures to bolster the
112 48 security of digital banking

• Big data analytics uses

Emergence of advanced analytics
big data techniques like AI and ML,
analytics allowing organizations to
2022 2027P prevent advanced fraud
2022 2027P
Note(s): FDP TAM is the overall FDP market, whereas the FDP SAM includes the total outsourced market
Source(s): Primary conversations, Industry reports, Secondary research, Praxis analysis

82
Singapore > FDP players – Headwinds and
tailwinds

Digital transformation, increase in financial fraud are the drivers of FDP

IL
LU
solutions adoption whereas limited data access is the main challenge

ST
R AT
IV
E
• The digital transformation has led to an increase in account creations / contactless payments in Singapore,
Digital transformation
particularly among the e-Commerce merchants à greater potential for FDP players

Increase in banking related • Banking-related scams surged in the wake of the pandemic, leaving customers vulnerable to phishing and other
fraud means of fraud à need for FDP players to mitigate fraudulent activities
Opportunities / Tailwinds

• Due to latency issues, banks struggle in running deep-learning models at scale in real-time à a significant
Latency issues in banks
amount of fraud is going undetected

• The volume of transactions involving Buy Now, Pay Later apps and digital / mobile wallet providers is expected to
Buy Now, Pay Later
continue to grow à increase in fraud attacks, and hence, the demand for FDP solutions

Adoption of fraud • Almost all digital banks and alternative finance providers including BNPL and digital wallets have not yet fully
management framework integrated cybersecurity and operations into fraud prevention processes

• Banks and financial services companies have increased their use of internet and mobile apps for customer
Migration to digital solutions onboarding and unless advanced methods of fraud prevention are used, digital fraudsters can target inherent
for onboarding and vulnerabilities using stolen ids, and device hacking
transaction monitoring • Fraud are typically detected several weeks later, leading to significant increase in investigation efforts and time to
recover lost money

Limited access to third party • Across both online and mobile channels, having limited access to real-time third-party data is a top factor in making
Challenges /
Headwinds

data customer identity verification a challenge for businesses in Singapore

• While technology has eased fund transactions, it has also facilitated fraudsters in carrying out fraudulent transactions
Increasing complexity of
fraud attacks • Fraudsters are constantly innovating new ways of infiltrating the financial systems with emerging advancements in
technologies

Source(s): Secondary research, Praxis analysis 83

Agenda

Introduction
FDP overview
Global adoption of FDP
India FDP market landscape

FDP market landscape in Southeast Asia

FDP market landscape in Singapore

FDP market landscape in Indonesia
FDP market landscape in Malaysia
FDP market landscape in Vietnam
FDP market landscape in Thailand
FDP market landscape in Philippines
FDP playbook
Appendix

84
Indonesia > FDP market

Driven by smart phone penetration and fintech advancement, digital transactions are
expected to rise both in value and volume increasing the probability of fraud
Digital transactions value is expected to Mobile smart phone penetration to reach ~ Digital transactions volume is expected to
increase to ~ US$ 129B by 2027 US$ 244M in 2027 grow at a CAGR of ~15%

Value of digital transactions in Fintech Mobile smart phone penetration Volume of digital transactions
In US$ B, 2022 - 27P In M, 2022 - 27P In B, 2022 - 27P

CAGR
~6%
CAGR
CAGR ~15%
~13%

129 244 11
197

72
5

2022 2027P 2022 2027P 2022 2027P

Source(s): Statista, ACI worldwide, GBG, Secondary research, Praxis analysis

85
Indonesia > FDP market size

Of the total US$ 491M addressable FDP market, ~US$ 139M was the
serviceable addressable FDP market in 2022
FDP TAM was ~US$ 491M in 2022 and is FDP SAM was ~US$ 139M in 2022 and is Rise in internet penetration, regulatory push
expected to be ~US$ 854M in 2027 expected to be ~US$ 304M in 2027 by govt. are the top growth drivers

FDP TAM FDP SAM Growth factor Details

US$ M, 2022 - 27P US$ M, 2022 - 27P
• There has been a significant
growth in internet penetration
Rise in internet
from 34% in 2015 to 74% in
penetration
2022 resulting in higher volume
of digital transactions

CAGR • Indonesian govt has laid out

~ 12% specific laws to detect and
CAGR Regulatory prevent laws, promoting
~ 17% push by govt companies to have special
Fraud Detection System (FDS)
in place (Article 34)
• Pandemic pushed businesses to
854 move online and provided people
with the convenience of online
304
Covid-19 platforms
impact • Even after the pandemic digital-
491 first lifestyle didn’t fade away
fueling the growth of digital
139 transactions

• With more products being bought

Shift to e- online, customers have changed
commerce their mode of purchase leading to
increase in online transactions
2022 2027P 2022 2027P
Note(s): FDP TAM is the overall FDP market, whereas the FDP SAM includes the total outsourced market
Source(s): Primary conversations, Industry reports, Secondary research, Praxis analysis

86
Indonesia > FDP players – Headwinds and
tailwinds

Inadequate data standardization is one of the main challenges whereas increased

real-time payments and emergence of fintech start-ups are the major opportunities

• The outlook for real-time payments in Indonesia is excellent driven by their government’s clearly stated
Growth in real-time ambition to create an end-to-end integrated digital economy
Opportunities / Tailwinds

payments • Real-time payments volume is projected to be 1.6B by 2026 which creates fraud vulnerabilities
compelling organizations to adopt FDP solutions
• 1100+ fintech startup companies have emerged in Indonesia out of which majority of them are payment
Emergence of fintech service providers
start-ups • These companies are the largest adopters of FDP solutions implying greater opportunity for growth for
FDP players in the Indonesian market
• Organizations are looking at future-proofing fraud prevention through investment in fraud detection
Increase in investment technologies
budget for FDP • FDP solution providers are getting room for growth because of these investments

• The limitation resulting in ineffective fraud risk investigations is fragmented data as a result of
piecemeal systems and software
Challenges / Headwinds

Fragmented data • Large proportion of data resides in disparate legacy systems, increasing the number and cost of APIs
required to collate and analyse data

• The lack of data standardisation and governance is a cause for ineffective fraud risk investigation
Inadequate data
• Implementation becomes a challenge for FDP solution providers as client data is not standardised
standardization

• A common challenge among organizations is not having a cohesive view of the customer journey
Lack of 360 degree through acquisition, onboarding, usage and transactions, which limits the analytical strength to
customer view proactively detect fraud and create the alert

Source(s): GBG and The Asia Banker (Survey of N=324 financial institutions), Secondary research, Praxis analysis

87
Agenda

Introduction
FDP overview
Global adoption of FDP
India FDP market landscape

FDP market landscape in Southeast Asia

FDP market landscape in Singapore

FDP market landscape in Indonesia
FDP market landscape in Malaysia
FDP market landscape in Vietnam
FDP market landscape in Thailand
FDP market landscape in Philippines
FDP playbook
Appendix

88
Malaysia > Smartphone and internet
penetration

Smartphone users and internet users were ~29.4M in 2022 and are expected
to reach ~31.7M and ~31.6M respectively by 2027
Smartphone users are expected to reach ~31.7M by 2027, Internet users are expected to reach ~31.6M by 2027,
growing at a CAGR of 1% growing at a CAGR of 1%

Smartphone users Internet users

In M, 2022 - 27P In M, 2022 - 27P

CAGR
CAGR ~1%
~1%

31,7 31,6
29,4
29,4

2022 2027P 2022 2027P

Source(s): Statista, World bank, Secondary research, Praxis analysis

89
Malaysia > Digital transaction landscape

Digital transaction volume to reach ~17B by 2027; credit cards accounted for
~30% of the total digital transactions in 2021
Digital transactions value is expected to Digital transactions volume is expected to be Most of the payments are made through credit
increase to ~US$ 49B by 2027 ~16B in 2027, growing at ~22% CAGR and debit cards

Value of digital transactions in Volume of digital transactions Transaction volume across payment
Fintech In B, 2022 - 27P methods
In US$ B, 2022 - 27P In %, 2021
N = 121

31%

26%
CAGR CAGR
~22% ~22%

20%

15%
17 13%
49

18 6 3%

2022 2027P 2022 2027P Credit Debit Mobile/ Direct Traditional BNPL
cards cards Digit deposit Apps
wallet
Source(s): Statista, ACI worldwide, LexisNexis industry report (survey of N = 121 fraud and risk executives across industries), Secondary research, Praxis
analysis

90
 Malaysia > Fraud costs

Fraud costs banks and financial services 4.5X the value of fraud which is
largely contributed by transactions
Cost of fraud for unit amount lost in transaction Fraud costs across customer journey is 3rd party / Synthetic identity fraud constitute
is more than US$ 4.5 in FS dominated by transactions more than 30% of fraud losses

Cost of fraud for unit amount lost Fraud costs by customer journey Distribution of losses by fraud type
in transaction stage In %, 2021
In US$, 2022 In %, 2022
N = 121
N = 121 N = 121

11% 14% 13%

30% 27%
14% 13%
14%
14% 15%
14%

37% 43%
29%
28% 29%
4,57
3,48

33% 30% 32% 29% 29%

E-commerce Financial services Financial services E-commerce New cccount Transactions Account login
creation
APAC avg. Lost / stolen merchandise
(US$)
3.56 5.24 New account Transactions Account login Fraudulent request for return / refund
creation 3rd party account takeover
Source(s): Statista, LexisNexis industry report (survey of N = 121 fraud and risk executives across industries), Secondary research, Praxis analysis

91
 Malaysia > FDP market size

Of the total US$ 146M addressable FDP market in Malaysia, ~US$ 48M was
the serviceable addressable FDP market in 2022
FDP TAM was ~US$ 146M in 2022 and is FDP SAM was ~US$ 48M in 2022 and is Regulators intervention, rise in internet
expected to be ~US$ 338M in 2027 expected to be ~US$ 128M in 2027 penetration are the top growth drivers
Growth factor Details
FDP TAM FDP SAM
US$ M, 2022 - 27P US$ M, 2022 - 27P • Bank Negara Malaysia (BNM)
updated its Risk Management in
Technology (RMiT) policy to
Increasing
include need for automated
focus from
fraud detection system to
regulators
monitor all financial
transactions by leveraging
CAGR heuristic behavioural analysis
~ 18% CAGR
~ 22% • At 89%, the high internet
Increasing penetration in 2022, will drive
internet the adoption of internet
penetration related services and eventually
FDP solutions
338 128
• With increased digitization and
the changing economic
Increased
environment, more number
digitization
fraud are expected in the next
few years
146 • Volume of digital payments are
48 Adoption of expected to grow at 22%
digital between 2022 - 27
payments and • Touchless financial transactions
NFC have further increased the
2022 2027P 2022 2027P technology points of vulnerabilities for a
potential fraud attack
Note(s): FDP TAM is the overall FDP market, whereas the FDP SAM includes the total outsourced market
Source(s): Primary conversations, Industry reports, Secondary research, Praxis analysis

92
Malaysia > FDP players – Headwinds and
tailwinds

Digital transformation will foster the adoption of FDP solutions whereas

conservative budget for fraud and risk management act as a deterrent

• Significant increase in remote channel use, digital payment methods and omnichannel among Malaysian
businesses
Opportunities / Tailwinds

Digital transformation of • Rapid growth in use of mobile channels for payment like digital wallets (increased use of e-wallets like
Malaysian businesses Boost, GrabPay etc.) and ordering via Buy Online/ Pick Up in Store (BOPIS) and curb side pick up
becoming commonplace in the midst of the pandemic

• Malaysian firms are more likely to use third-party solutions to combat digital fraud and manual review
Likely increased use of
rates, average time for order reviews, and order approval rates to measure their fraud prevention
third-party FDP solutions
performance
Preference for end-to-end • End-to-end fraud management platform readiness is a key differentiation to driving digital product
fraud management preference for 56% of Malaysian financial institutions
platform
• Malaysia had the most conservative estimated fraud risk and management technologies budget of US$
Conservative budget for 74 M per company
Challenges / Headwinds

FDP solutions • On average, the estimated budget to purchase new fraud prevention technology in APAC in 2020-21 is at
US$ 83 M

• More real-time third-party data is needed to help firms better balance speed of approval against
Lack off real-time data
customer abandonment before transaction completion
availability

• Fraud attacks are becoming more sophisticated and this is an increasing challenge among many
businesses in Malaysia
Increasing complexity of
fraud attacks • Fraud attacks like sophisticated bot attacks, social engineering fraud etc are growing in number, and
making it difficult to detect and prevent fraud

Source(s): GBG and The Asia Banker (Survey of N=324 of financial institutions), Secondary research, Praxis analysis 93
Agenda

Introduction
FDP overview
Global adoption of FDP
India FDP market landscape

FDP market landscape in Southeast Asia

FDP market landscape in Singapore

FDP market landscape in Indonesia
FDP market landscape in Malaysia
FDP market landscape in Vietnam
FDP market landscape in Thailand
FDP market landscape in Philippines
FDP playbook
Appendix

94
Vietnam > Smartphone and internet
penetration

Value of digital transactions is expected to grow at ~16%; Digital

transactions volume is expected to grow at ~12% between 2022 - 27
Digital transactions value is expected to Mobile smartphones penetration to reach 88M Volume of digital transactions expected to grow at
increase to ~US$ 43B by 2027 in 2027 a CAGR of ~12%

Value of digital transactions in Fintech Mobile smart phone penetration Volume of digital transactions
In US$ B, 2022 - 27P In M, 2022 - 27P In B, 2022 - 27P

CAGR
~4%
CAGR CAGR
~16% ~12%

43 4,1
88
74
2,4
20

2022 2027P 2022 2027P 2022 2027P

Source(s): Statista, ACI worldwide, GBG, Secondary research, Praxis analysis

95
 Vietnam > FDP market size

Of the total US$ 139M addressable FDP market in Vietnam, ~ US$ 39M was
the serviceable addressable FDP market in 2022
FDP TAM was ~US$ 139M in 2022 and is FDP SAM was ~US$ 39M in 2022 and is High fraud rate & regulatory push by the
expected to be ~US$ 245M in 2027 expected to be ~US$ 81M in 2027 govt will drive the adoption of FDP solutions
Growth
Details
FDP TAM FDP SAM factor
US$ M, 2022 - 27P US$ M, 2022 - 27P • Internet penetration in Vietnam currently is
High & growing
~ 73% and growing at 3.4%, to will lead to
internet
an increased focus on fraud detection and
penetration
prevention

• Vietnam’s fraud rate is the highest in SEA

at 59.2%
CAGR
Highest fraud • With anti-fraud measures slower to
~ 12% develop than the economy, fraudsters are
rate in SEA
seeing this emerging market as a perfect
CAGR
target; to drive adoption of FDP solutions
~ 16% in the coming years

• Vietnamese govt introduced laws which

have greatly focused on decreasing fraud
Regulatory rates
push by As an example, cybersecurity law is aimed
245 81 Vietnam Govt
•
at tracking down traces and collecting
evidence of online fraudulent appropriation
of assets.

139 • Adoption of online digital applications are

39 driving the growth for fake websites and
Rise in online mobile application
digital • Increasing digital transactions (at a
applications & CAGR of 12%) are leading several digital
transactions companies to adopt FDP solutions and
technologies to mitigate growing avenues
2022 2027P 2022 2027P of fraud

Note(s): FDP TAM is the overall FDP market, whereas the FDP SAM includes the total outsourced market
Source(s): Primary conversations, Industry reports, Secondary research, Praxis analysis

96
Vietnam > FDP players – Headwinds and tailwinds

Rising adoption of digital payments and a very high fraud rate in the country
will push companies to focus on fraud detection and prevention solutions

• Volume of mobile payment transactions in Vietnam are expected to grow by 50-80%, number of internet
payments to increase by 35%-40% annually, and the rate of individuals and organisations using cashless
Increasing adoption of
payments to reach 40%
digital payments
• Creates a possible opportunity for FDP market with increasing digital transactions
Opportunities / Tailwinds

Preference for end-to-end • Preference for end-to-end fraud management platform is a key differentiation to driving digital product
fraud management preference for 56% of Malaysian financial institutions
platform

• Adoption of AI / ML and other advanced technologies in anomaly and fraud detection in e-commerce
AI / ML adoption firms has aided the FDP market to become more accurate
• This will enable faster, more efficient and accurate fraud detection and prevention by companies

• Vietnam’s fraud rate is the highest in SEA -> more than 50% companies have experienced a fraud in the
last 2 years
Highest fraud rate in SEA • With anti-fraud measures slower to develop than the economy, this creates a gap in the market and an
opportunity for FDP players to cater to this emerging and growing demand

• Vietnam has a low estimated fraud and risk management budget of US$ 75 M per company
Limited budget for FDP
Challenges /
Headwinds

• On average, the estimated budget for new fraud prevention technology in APAC in 2020-21 is at US$ 83
solutions
M, ~11% more than that of Vietnam
• More real-time third-party data is needed to help firms better balance speed of approval against
Lack off real-time data
customer abandonment before transaction completion
availability

Source(s): GBG and The Asia Banker (Survey of N=324 of financial institutions), Secondary research, Praxis analysis

97
Agenda

Introduction
FDP overview
Global adoption of FDP
India FDP market landscape

FDP market landscape in Southeast Asia

FDP market landscape in Singapore

FDP market landscape in Indonesia
FDP market landscape in Malaysia
FDP market landscape in Vietnam
FDP market landscape in Thailand
FDP market landscape in Philippines
FDP playbook
Appendix

98
Thailand > Smartphone and internet penetration

Smartphone users and internet users were both ~56.2M in 2022 and are
expected to reach ~60M and ~60.1M respectively by 2027
Smartphone users are expected to reach ~60M by 2027, Internet users are expected to reach ~60.1M by 2027,
growing at a CAGR of 1% growing at a CAGR of 1%

Smartphone users Internet users

In M, 2022 - 27P In M, 2022 - 27P
Growth of smartphone
and internet users is low
because of high
CAGR CAGR
penetration
~1% ~1%

60,0 60,1
56,2 56,2

2022 2027P 2022 2027P

Source(s): Statista, World bank, Secondary research, Praxis analysis

99
Thailand > Digital transaction landscape

Digital transaction volume to reach ~38B by 2027; credit cards accounted for ~30%
of the total digital transactions in 2021
Digital transactions value is expected to increase Digital transactions volume is expected to be ~ 30% digital transactions happen through credit
to ~US$ 57B by 2027 ~38B in 2027, growing at ~15% CAGR cards

Value of digital transactions in Volume of digital transactions Transaction volume across payment
Fintech methods
In B, 2022 - 27P In %, 2021
In US$ B, 2022 - 27P
N = 120

CAGR 29%
~14% CAGR 27%
~15%

20%
17%
57
38 12%

30
18
4%

2022 2027P Credit Debit Mobile/ Direct Traditional BNPL

2022 2027P
cards cards Digit deposit Apps
wallet
Source(s): Statista, ACI worldwide, LexisNexis industry report (survey of N = 120 fraud and risk executives across industries), Secondary research, Praxis analysis

100
 Thailand > Fraud costs

Fraud costs banks and financial services 5X the value of fraud which is largely
contributed by transactions
Cost of fraud for unit amount lost in transaction Fraud costs across customer journey is Synthetic identity and friendly fraud losses
is more than US$ 5 in FS dominated by transactions constitute more than 55% of total losses

Cost of fraud for unit amount Fraud costs by customer journey Distribution of losses by fraud type
lost in transaction stage In %, 2022
In US$, 2022 In %, 2022
N = 120 N = 120 N = 120

12% 13% 13%

26%
34% 12% 13% 12%

14% 16% 13%

43%
35% 29% 30%
29%
5,31

3,57

31% 31% 32% 28% 32%

E-commerce Financial services Financial services E-commerce New cccount Transactions Account login
creation
APAC avg. New account Transactions Account login Lost / stolen merchandise
3.56 5.24 creation Fraudulent request for return / refund
(US$) 3rd party account takeover
Friendly / 1st party fraud
3rd party / Synthetic identity fraud

Source(s): LexisNexis industry report (survey of N = 120 fraud and risk executives across industries), Secondary research, Praxis analysis

101
Thailand > FDP market size

Of the total US$ 293M addressable FDP market, ~US$ 74M was the
serviceable addressable FDP market in 2022
FDP TAM was ~US$ 293M in 2022 and is FDP SAM was ~US$ 74M in 2022 and is Rise in internet and e-commerce penetration
expected to be ~US$ 517M in 2027 expected to be ~US$ 162M in 2027 are the top growth drivers

FDP TAM FDP SAM Growth factor Details

US$ M, 2022 - 27P US$ M, 2022 - 27P

• Internet penetration stands at 81%

Increasing in 2022, which is expected to drive
internet the adoption of internet-related
penetration services and eventually FDP
solutions
CAGR
~ 12% CAGR • Pandemic pushed customers to
~ 17% purchase online and provided them
Increasing e- with the convenience of online
commerce platforms
penetration • Post pandemic customers chose
using the online platforms rise to
162 fraud vulnerabilities
517
• Credit card fraud rates are growing
Credit card at a rate of 20% annually à
fraud rates increase in demand for FDP
solutions
293
74

• Big data analytics uses advanced

Emergence of analytics techniques like AI and
big data analytics ML, allowing organizations to prevent
advanced fraud
2022 2027P 2022 2027P
Note(s): FDP TAM is the overall FDP market, whereas the FDP SAM includes the total outsourced market
Source(s): Primary conversations, Industry reports, Secondary research, Praxis analysis

102
Thailand > FDP players – Headwinds and
tailwinds

Inadequate data standardization are the main challenges whereas growth in real-
time payments and migration to digital solutions are the major opportunities

Growth in real-time • Thailand has shown a significant growth in real-time payments; its volume is projected to reach 32B by 2027 from
payments ~11 B in 2022, growing at 23%
Opportunities / Tailwinds

• This is expected to drive demand for real time transaction monitoring FDPs
Advancement in technology • The outbreak of Covid-19 pandemic accelerated the digital transformation process for businesses which create a
broad scope for digital fraud
• In Thailand, government agencies worked with private sector to create unmatched digital infrastructure bringing in
abundance of digital data which gets exposed to plethora of fraud vulnerabilities creating a need for advanced
FDP solutions
Migration to digital solutions • The organizations have started onboarding customers digitally and looking to invest in transaction and payments
for onboarding and fraud management solutions
transaction monitoring • The volume of digital transactions were ~18B in 2022 and expected to grow at a CAGR of ~15% pushing
companies to improve their fraud detection capabilities to prevent probable fraud due to digital transactions
Inadequate data • The lack of data standardisation and governance is a cause for ineffective fraud risk investigation
standardization • Deployment of FDP solution becomes difficult because of data standardization issues
Challenges / Headwinds

Big data and machine • In majority of the organizations big data and machine learning is not implemented for transaction monitoring
learning are not • FDP players face challenges to deploy an advanced FDP solution in the absence of big data and ML capabilities
implemented

• Fraudsters are becoming more advanced in finding loopholes in the systems and commit complex fraud creating
Increasing complexity of challenges for FDP players in terms of development or improvisation of existing services they offer
fraud attacks

Data privacy risks • Deployment of a FDP solution requires thorough understanding of the client’s system for effective fraud management
but due to data privacy concerns clients are apprehensive in disclosing confidential data and hence building
trust with clients is becoming challenge for FDP players

Source(s): Secondary research, Praxis analysis

103
Agenda

Introduction
FDP overview
Global adoption of FDP
India FDP market landscape

FDP market landscape in Southeast Asia

FDP market landscape in Singapore

FDP market landscape in Indonesia
FDP market landscape in Malaysia
FDP market landscape in Vietnam
FDP market landscape in Thailand
FDP market landscape in Philippines

FDP playbook
Appendix

104
Philippines > Smartphone and internet penetration

Smartphone users and internet users were ~82.3M and ~78.9M respectively in
2022 and are expected to reach ~97.2M and ~95M respectively by 2027
Smartphone users are expected to reach ~97.2M by 2027, Internet users are expected to reach ~95M by 2027,
growing at a CAGR of 3% growing at a CAGR of 4%

Smartphone users Internet users

In M, 2022 - 27P In M, 2022 - 27P

CAGR CAGR
~3% ~4%

95,0
97,2
78,9
82,3

2022 2027P 2022 2027P

Source(s):Statista, World bank, Secondary research, Praxis analysis

105
Philippines > Digital transaction landscape

Digital transaction volume to reach ~3.7B by 2027; credit cards accounted for
~30% of the total digital transactions in 2021
Digital transactions value is expected to Digital transactions volume is expected to be ~50% transactions happen through cards whereas
increase to ~US$ 57B by 2027 ~3.7B in 2027, growing at ~21% CAGR ~20% happen through mobile wallet

Value of digital transactions in Volume of digital transactions Transaction volume across payment
Fintech In B, 2022 - 27P methods
In US$ B, 2022 - 27P In %, 2021
N = 120

30%

CAGR
~14% CAGR
~21% 21%
19%

14% 14%
3,7
57 12%

29
1,2

Credit Debit Mobile/ Direct Traditional BNPL

2022 2027P 2022 2027P
cards cards Digit deposit Apps
wallet
Source(s): Statista, ACI worldwide, LexisNexis industry report (survey of N = 120 fraud and risk executives across industries), Secondary research,
Praxis analysis

106
 Philippines > Fraud costs

Fraud costs banks and financial services 4.5X the value of fraud which is
largely contributed by transactions
Cost of fraud for unit amount lost in transaction Fraud costs across customer journey is Synthetic identity and friendly fraud losses
is ~US$ 4.5 in FS dominated by purchase transactions constitute more than 55% of total losses

Cost of fraud for unit amount Fraud costs by customer journey Distribution of losses by fraud type
lost in transaction stage In %, 2022
In US$, 2022 In %, 2022
N = 120 N = 120 N = 120

10% 15% 11%

33% 31% 11% 13%

15%
13%
15%
14%

39% 28%
36%
31%
29%
4,50
3,46

37%
31% 30% 28% 30%

E-commerce Financial services Financial services E-commerce New cccount Transactions Account login
creation
New account Transactions Account login Lost / stolen merchandise
APAC avg.
3.56 5.24 creation Fraudulent request for return / refund
(US$) 3rd party account takeover
Friendly / 1st party fraud
3rd party / Synthetic identity fraud
Source(s): LexisNexis industry report (survey of N = 120 fraud and risk executives across industries), Secondary research, Praxis
analysis

107
Philippines > FDP market size

Of the total US$ 197M addressable FDP market, ~US$ 51M was the
serviceable addressable FDP market in 2022
FDP TAM was ~US$ 197M in 2022 and is FDP SAM was ~US$ 51M in 2022 and is Rising digital payment adoption, shift to digital
expected to be ~US$ 385M in 2027 expected to be US$ 120M+ in 2027 channels, BSP mandates are the key drivers

Growth factor Details

FDP TAM FDP SAM
Increase in • Digital payments form ~30% of
US$ M, 2022 - 27P US$ M, 2022 - 27P
digital total retail payments in 2021, up
payments from ~20% share in 2020
• Cybercriminals have taken
advantage of more Filipinos
shifting to mobile apps
Shift to digital
CAGR channels • Rapid technological
CAGR advancements in the fields of AI /
~ 14%
~ 19% ML, IoT etc. have also led to
growing number of digital apps
• Financial institutions offering
120 electronic payments and financial
services must undergo the BSP’s
385 approval process
BSP* mandate • Further BSP has been developing
a circular requiring the adoption
197 51 of strong fraud management
systems and temporary freezes
on funds
• With fraud becoming more
Fraud are
complex, businesses are looking
becoming
2022 2027P 2022 2027P for a robust fraud and security
more
technology platform, offering
sophisticated
strong fraud management

Source(s): Primary conversations, Industry reports, Secondary research, Praxis analysis

108
Philippines > FDP players – Headwinds and tailwinds

Growing fintech penetration, government push are the drivers of FDP solutions adoption
whereas latency issues, weak digital infrastructure are the main challenges

• The penetration of Fintech services reached ~49% in 2021, making it almost every second Filipino currently using
Fintech penetration
at least one Fintech service à greater opportunity for FDP players
Opportunities / Tailwinds

• BSP* target of achieving 70% account ownership à rapid digital shift and hence, boosting the demand for FDP
solutions
Government push
• Financial institutions are now required to have an automated and real-time fraud monitoring and detection
system to address the growing incidents of digital fraud

• As AI / ML are becoming more common, businesses are looking for a continuous cycle of monitoring, detection,
AI / ML adoption
decisions, case management à greater opportunity for FDP players

• Fraud management solutions are becoming more crucial in banks and financial institutions owing to the dramatic
Increasing fraudulent increase in fraudulent activities
activities in banks and
financial institutions • Banks are actively looking for fraud management tools; many banks in the Philippines have adopted telco data-
based fraud authentication and verification tools to reduce fraudulent credit card and loan applications
Challenges / Headwinds

Latency issues • Due to latency issues, complex fraud detection often cannot be completed in real-time

• Weak digital infrastructure, high internet cost, and uneven quality of the internet are hampering the effective
Weak digital infrastructure
use of digital technologies

Data constraints • Non – exhaustive and poor-quality data makes difficult for FDP players to identify and prevent fraud efficiently

SNote(s): *Bangko Sentral ng Pilipinas (BSP) is the central bank of the Republic of the Philippines
Source(s): Primary conversations, Industry reports, Secondary research, Praxis analysis 109
Agenda

Introduction
FDP overview
Global adoption of FDP
India FDP market landscape

FDP market landscape in Southeast Asia

FDP playbook
Appendix

110
Product roadmap

Many FDP players have evolved from different starting points to develop end-
to-end capabilities
ID and user record
Identity protection – Transaction
database (e.g. Orchestration1
API (analytics) monitoring
bureaus)

ü ü ü ü
ü ü ü ü
Global FDP
players ü û ü û
ü ü ü ü
ü ü ü ü
ü ü ü ü
Indian FDP
ü û ü ü
players
ü û û û
ü û û û
Note(s): 1. A solution that connects tools producing risk and trust signals to underlying analytics tools, and provide step-up authentication in response
Source(s): Company websites, Industry reports, Secondary research, Praxis analysis
Starting point
111
Best practices

Six key areas FDP players should focus on to create an efficient and accurate
fraud detection and prevention model
1 2 3
Machine learning enabled solutions instead
Multi-layered solution approach Right balance
of static rules-based systems

• When fraudsters adopt new tactics or • A multi-layered, strong authentication defense • Striking the balance between frictionless
customers change their usage pattern and approach is needed as single point protection customer experience and robust security
behaviors, ML models ingest and analyze is no longer enough and results in single point is the key
these signals and create alerts in real-time of failure
• Frictionless CX like seamless onboarding,
• Accuracy of ML solutions improves with the • Includes a single authentication decision
increase of usage and data platform that incorporates real-time event one-click checkout, frictionless
data, third-party signals, cross-channel authentication increases customer LTV,
intelligence improves brand loyalty, reduces drop-
offs from SMS OTP delivery failure

4 5 6
Real-time monitoring Focusing on multiple attributes White box machine learning

• Real-time monitoring and tracking tools help in • Assessing various attributes like physical • Sophisticated whitebox algorithms are
proactively monitoring fraud by analyzing identity attributes, behavioral attributes, considered central to the fight against fraud
500+ device metrics, biometrics and user keystroke dynamics, users’ login from both in terms of fraud prevention and
behavior multiple devices, locations and channels detection
• RTM also helps in significantly improving fraud among others for efficient fraud detection • Whitebox machine learning algorithms give
detection accuracy and prevention clearly readable rules along with the decision
and result
• Ability to tweak and adapt decision
processes, optimizing and improving the
output at will, where needed
• Humans have the final say on the results, so
accuracy is high

Source(s): Primary conversations, Industry reports, Secondary research, Praxis analysis

112
Key capabilities

FDP players need to focus on 6 key areas to expand operations, gain product
maturity and increase market share

1. Tech capabilities

2. Market fit

6. Customer
acquisition
and
retention
3. Ease of
integration

5. Pricing
structure 4.
Partnerships

113
 Techniques

1
Real-time monitoring, behavioral biometrics, predictive analytics, and white-box ML
are key techniques used to achieve frictionless experience & robust detection
Impact on fraud FDP platforms using this
Technique Brief description
detection accuracy technique
• Analyzes parameters such as - fingerprint, facial
Physical biometrics
parameters or voice

• Behavioral biometric authentication includes

Behavioral biometrics keystroke dynamics, gait analysis, cognitive
biometrics, and signature analysis
• Designed to work in a ‘set and forget’ mode, where
Blackbox ML the decisions are opaque and automated
• Great for small businesses

Advanced AI / ML • Gives you clear explanations as to why a risk rule was

suggested
Whitebox ML • Makes it easier to understand where the risk is and
gives fraud managers more flexibility to improve
their fraud prevention strategy

• Requires manual tuning to adapt to new data

• Risky users can fail to trigger rules based on known
Rules-based system
patterns, resulting in high false positive and false
negative rate

Real-time monitoring • Real-time risk scores to identify fraud quickly

• With blockchain, one can share the recorded data in

Blockchain / distributed ledger
real-time and update it with the approval of all
technology
parties who have access to the data
• Analyzing past data, trends, and variables, to build
Predictive analytics
Note(s): FDP platforms list is not exhaustive
accurate fraud score algorithms and model
Source(s): Primary conversations, Industry reports, Secondary research, Praxis analysis
Low
High

114
 Market fit

2
FDP players help enterprises in addressing several gaps in their current fraud
detection and prevention capability
Most common How can FDP players help in filling white
White space
deployment model spaces
• Inhouse for legacy • Limited data access • Strong API for sourcing large databases
players • Static approaches (depends only on historic from multiple channels (like bureaus,
Banking data) aggregators, telcos)
• Disparate teams for fraud detection and • Real-time login and transaction monitoring
prevention à latency • Orchestration capability
• Outsourcing for new • Limited data access • Strong API for sourcing large databases
-age digital fintech • Weak identity verification process from multiple channels (like bureaus,
companies and • Lack of end-to-end solutions for monitoring aggregators, telcos)
Financial neobanks fraud across the digital customer journey • Real-time login and transaction monitoring
• Behavioral and physical biometrics
services • Robust keystroke dynamics system
• Orchestration capability
• AI / ML expertise to detect and prevent
fraud across customer journey
• Inhouse largely for • Inability to efficiently detect and prevent • Device fingerprinting
legacy players claim related fraud • Behavioral biometrics
Insurance • Outsourcing for
new-age digital
players
• Outsourcing for • Weak transaction monitoring system • Behavioral biometrics
internet fist brands • Difficulty in tracking RTO and chargeback • Guarantee model
E-commerce • Inhouse for large e- fraud • Ensures low false positive rate
commerce platforms • High false positive rate
Real money • Inhouse • Post-facto monitoring • Real-time monitoring capability
gaming

Source(s): Primary conversations, Praxis analysis

115
 Integration timeline

3
Integration of FDP solution predominantly consists of 6 stages, post which
the solution goes live

Start
Kick-off meeting Historical data received from client
• Overview of the product / solution / platform • FDP provider asks for historical data for
• Use cases according to industry / vulnerability analysis
of touchpoint • Transactional and login data
• Identify relevant product features • Negative/positive labelled historical
• Create Demo account on the portal transactions

Technical Integration Historical data analysis

• Finalize the technical details and decision • FDP provider analyses historical data
criteria • Creates report for the client
• Format data according FDP provider API • Showcase the abilities and accuracy of
• Validation of solution / product results
• Integrate client’s production environment
Live mode

Feedback loop Passive Listening

• Test the product with various iterations • Reiteration of implemented rules based on historical
• Adjust scoring thresholds data
• Ensure (API/Manually) proper labelling • Implement custom, industry specific rules
• Fine-tune machine learning algorithm

Business contact Integration team of FDP player Customer success team of FDP player

Technical contact Data science team of FDP player

Source(s): Primary conversations, Industry reports, Secondary research, Praxis analysis

116
Ease of integration

Integration with current fraud detection and prevention systems and intuitive
UI/UX are some of the main features that FDP players should be focus on
Current maturity
Features Details
of FDP players
“Backward integration is one the most
• Availability of features like search function, logging function, important criteria we look at while
workflow creation, reporting, custom rules engine etc. analyzing an FDP solution. We don’t want
UI / UX
• Dashboard should be clean , intuitive and noise-free, will help in more to hamper our internal processes much and
efficient and quicker decision making the solution should easily be able to blend
into the existing system”
• Installing and configuring software on numerous on-premise systems
can take weeks to complete, leading to prolonged implementation -Risk and fraud Head, Leading bank
Ease of time and complex implementation
deployment
• 3rd party FDP solutions have much quicker, simpler and speedy
deployment
“The uptime of the application should be
• Fraud detection and prevention methods should blend seamlessly extremely high. We don’t want bugs and
with the existing operational workflows other problems coming up regularly because
that would be a major concern for us”
Integration with • Enterprises should have easy access to data - shouldn’t need months
current of intensive services support to integrate output with operational - Product manager, E-commerce platform
operations workflow
• Companies may not want to rebuild everything from the ground up,
or they are legally required to keep some data to themselves “The product features and capabilities
should be intuitive to the team. This way we
• Integration should be bundled with support and training can ensure less time is spent on
Training &
support • Allocation of proper deployment teams and support teams for understanding the solution and
resolution of queries and training support to the enterprises is optimal implementation is smooth and frictionless”

• Updates, extra features and bug fixes – taken care of by the provider - Risk dept head, Insurtech startup
Ease of
maintenance • Roll-out for new features tends to be much faster than with built-in
solutions

Low
Source(s): Primary conversations, Industry reports, Secondary research, Praxis analysis High

117
 Efficient partnership

4
FDP players partner with bureaus, aggregators, telcos for improving their
productivity and efficiency
Benefits of maintaining an extensive partner network for FDP players

Easy access to bulk Standardized Ease of market entry Improved tech

data processes capabilities
• Data is the most • Partnership with bureaus • Partnership with legacy • Partnering with
important requirement for / aggregators make systems gives new FDP aggregators make FDP
any FDP player services and solutions players easier players improve their tech
• Partnering with bureaus provided by FDP players accessibility to the market capabilities
give them access to standardized as their visibility gets
superior quality bulk data improved • FDP players must comply
which helps them improve • This helps FDP players to with the tech
their services make modifications in • The client's trust in FDP requirements of
their processes in line with player is enhanced when it aggregators which creates
their competitors partners with global a need of having
bureaus and telcos to advanced tech
strengthen their data deployment
availability

Source(s): Primary conversations, Industry reports, Secondary research, Praxis analysis

118
 Pricing structure

5
Majority of FDP players follow an ‘API call’ based pricing; other pricing structures like
guarantee premium are also being increasingly adopted by some FDP players
Pricing model Description Adoption
• Used for specific use cases within the customer life journey e.g. KYC, credit check,
PAN card verification etc.
• Largely used during the account creation and login phases of the customer
Per API call
journey
• Pricing can vary depending on the number of checks required
• Is both flexible and adaptable and provides transparency on spend
• Fixed price per transaction
Per transaction • Unit price reduces as the volume of transactions increase

• Fixed price per user based on pre-defined type and number of checks and
Per user decisioning required
• Unit price reduces as the volume of transactions increase

• Fixed percentage of the transactions monitored

• Typically, applicable for low-ticket and permissible daily transactions for
% of value of transaction
individuals
• Has a higher price per unit when compared with others
• Fixed cost for an initial volume of users or transactions, then charged per unit
Fixed thresholds • Typically, applicable for small to mid business or for situations where the volume
of transactions is uncertain

• Premium price assigned for chargeback guarantees in “Return to Origin” use

cases
Guarantee premium • Can lead to increased false positives due to stricter rules of fraud detection
• In case the FDP solution is unable to detect the fraud, it bears the cost of
logistics for the transaction
Low
High
Source(s): Secondary research, Praxis analysis
119
 Customer acquisition and retention

6
FDP SaaS players need to follow a structured sales process to acquire and
retain customers

1 2 3 4 5
Lead generation Conversion Nurturing Up-sell / cross sell Contract renewal
• Reaching out to • Reaching out to • Customer engagement • Selling higher value • Renewal of contract for
potential customers interested leads through with the platform products long term engagement
through marketing sales team and on-
Description • Special bundle deals to
campaigns, channel boarding them as
facilitate cross-selling
partners, etc. customers
products and solutions
• Inbound leads

• Lead gen channel mix • Conversion funnel (Qual • Accuracy of fraud • Quality of accounts • Proportion of contracts
to demo to trial to detection acquired (underlying nearing expire renewed
• Channel throughput: #
purchase) spend growth) on Q-o-Q basis
of leads generated p.m. • False positive rate
Output • Lead conversion ratio • Expansion MRR • Cohort-wise churn
metrics • Qualification approach • Customer M12, M24, M36
• CAC retention rates • Services attach rate • NPS / CSAT
• Cost Per Lead (CPL)
• Hunter productivity (new • ARR M12, M24, M36 • Growth rate of users /
• Lead Velocity Rate
logo ARR / hunter) retention account
• Reach-outs through • Demo to sales • Retention improvement • Gradual increase in MRR • CSAT score consistently
multiple channels conversion ratio in line across industries / of accounts with time >90%
[Sample] with peers geographies
Overall • Scope for synergies • Retention of key
through hunting teams accounts
assessment

Source(s): Primary conversations, Praxis analysis Hunting Farming

Low High

Performance of platform on criteria 120

Strategic prioritization

Strategic prioritization during different phases in the FDP business life cycle

Maturity - Sustain
● Unit economics
Scale
– Managing levers to optimize key
cost heads, increase productivity
● Customer acquisition
Early stage - Build and drive profitability
– Comprehensive sales strategy to
acquire customers ● Talent acquisition
● Product development
– Strategies aiming at recruiting and
– Identifying core objectives, research ● Adjacencies
retaining skilled professionals
and analysis, creating MVP and beta ‒ Expanding portfolio
versions of the product / app ● Customer retention
‒ Incremental growth
● Customer delight – CSAT excellence
● Vertical growth
– Assimilating feedback from users, – Loyalty program
launching MVP to get feedback from – Enriching FDP solutions portfolio
– Churn protection
users / stakeholders – Exploring different industries
● Geographical expansion
– Global and domestic expansion
Source(s): Primary conversations, Praxis analysis

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 Strategic prioritization

What makes a FDP SaaS business successful: Value needs to be created at

every step in the business to make it excel globally
Identification of Selective expansion in Targeting segments Ensuring smooth and
strengths and industries and basis opportunity and flawless execution of
Strategy and weaknesses geographies strengths strategy
focus

Optimizing sales and Checking development Checking employee

Controlling overheads Increasing LTV / CAC
marketing effort costs expenditure
Managing
costs

Sales & marketing Expansion to new Increasing account Cross selling and up Changing pricing and
Reducing churn
strategy markets / geographies value / ARPA selling bundling
Account /
revenue growth

Building sector / Invest in sales engines Investment in new Invest in sales team
Sharpen GTM strategy Increase online and Actively following
segment / industry / models / partner forms of B2B / B2C training and
on untapped sectors social media presence referenceable clients
Customer stronghold network marketing development
acquisition

Consistency and Well trained customer

24x7 availability of Involvement in Seamless and quick Self service help books
excellence in service success and service
customer support customer’s success service turnaround and guidelines
Customer delivery staff
success

Enrich development Constantly improve Align incentives of Invest in L&D Ensure proper Initiatives for employee
teams with AI & ML recruitment and employees with firm programs for feedback through motivation and
Talent and capability appraisal processes strategy employees multiple channels recognition
capability

Offer full suite of Options for self Frequent feature Extensive off the shelf Client software
Built in client specific Emphasis on data
features for major configuration and additions and update software integrations compatibility and
customizability privacy and security
Product verticals / segments repair cycles across value chain integrations
excellence

Source(s): Praxis analysis

Early stage (build) Scale stage Maturity stage
122
Future outlook

Fraud will become more sophisticated and complex in the future

Uptick in
Technological Automated Organized
Frankenstein
advancements attacks activity
fraud

• Advancements in technology • Fraudsters will increasingly • Refers to synthetic identity • Techniques like creating
have resulted in fraud adopt automated methods fraud verified accounts with fake
attacks occurring with to make cyberattacks and documents and then using
greater frequency, speed, account takeovers easier • Increasing due to multiple them in subsequent attacks,
and effectiveness and more scalable than ever factors - data breaches, point to a more organized
before dark web data access and attempt
• Rise of e-commerce, mobile the competitive lending
payments, and computing • For instance: landscape • Subtler signs like – incorrect
power is further increasing – Script creation (using fonts, wrong photo printing
the risk of fraud fraudulent information to • Fraudsters use AI to combine technique, or imitated
automate account facial characteristics from security features can only be
creation) different people to form a identified by advanced
– Credential stuffing new identity, creating a document analysis
(using stolen data from a challenge for businesses
breach to take over a relying on facial recognition
Source(s): Primary conversations, Industry reports, Praxis analysis
user’s other accounts) technology

123
Future outlook

FDP players are continuously focusing on enhancing their tech capabilities to

provide robust security against new-age evolving fraud

FDP players are striving to strengthen their AI/ML models to predict and detect fraud which are explainable to the clients as well –
this gives more reliability to the companies to label the detected fraud

New-age FDP players are looking to move towards becoming end-to-end solution providers, providing a suite of tech
capabilities covering use cases across the customer journey

Shifting focus to delve into emerging sectors such as cryptocurrency, real money gaming and gig economy – increasing
fraud cases and need for accurate FDP solutions increasing in these industries

FDP players are focusing their investments in establishing technology capabilities that improve customer experience
without compromising security robustness

FDP platforms are aiming to create an exhaustive database of transactions and other customer data fields that provides an
accurate and comprehensive picture of each user – to make fraud detection strikingly more accurate and efficient

Source(s): Industry reports, Praxis analysis

124
About Bureau

Bureau is a modern no-code decisioning platform. It delivers absolute

conclusions about digital identity trustworthiness to prevent fraud, ease
compliance, and make it easy for consumers to transact online.

The single AI-architected platform provides banks, fintech, gaming, gig

economy and e-commerce companies with a complete range of risk,
compliance, fraud prevention and detection, and onboarding solutions.

Its Identity Bureau network supplies customers with insights derived from
an identity graph and feedback loop about digital identities based on
contextualized linkages. Backed by tier-one investors Okta, Commerce
Ventures, Quona, Blume, and Village Global, Bureau is headquartered in
San Francisco, CA, with offices in Bangalore, India and Singapore.

Visit www.bureau.id and follow Bureau on LinkedIn.

125
About Praxis Global Alliance

Praxis Global Alliance is the next-gen management consulting firm revolutionizing how consulting projects are delivered. It delivers practical
solutions to the toughest business problems by uniquely combining domain practitioner expertise, AI-led research approaches, and digital
technologies. The company operates three business units, including Praxis Global Alliance Financial Investor Group (FIG), offering pre-deal support,
commercial due diligence, post-acquisition value creation, Praxis Global Alliance Business Enablement and Transformation (BET) for practitioner-led
business advisory and consulting, and PraxDigital™ delivering data engineering and analytics, AI, OpenData and visualization solutions to clients
across verticals.

Present in 4 locations in India, Praxis Global Alliance has successfully served 40+ countries with a team of over 200+ consultants and data scientists.
Team Praxis works with C-suite to the front-line executives across business streams, helping them with end-to-end business enablement,
organizational transformation, and revenue maximization support in an agile environment.
For more details, please visit: https://www.praxisga.com/

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