New Study Finds Smooth Digital Transactions “Essential to Business Survival” During and After Pandemic

Economist Intelligence Unit report for TransUnion highlights which emerging technologies could present challenges for and increase fraud prevention, economic inclusion and consumer privacy.

A new global and South African study by the Economist Intelligence Unit for TransUnion (NYSE: TRU) has overwhelmingly found the key to whether or not companies go out of business hinges on providing consumers friction-right digital transactions. Nearly 9 in 10 (88%) of South African, and 85% of global executives, surveyed as part of the study said they believe smooth transactions are “essential to business survival” rather than merely a competitive edge.

“COVID-19 has dramatically accelerated digital transformation with 62% of South African survey respondents saying their organisation has changed their digital transaction process due to the pandemic,” said Shai Cohen, senior vice president of Global Fraud Solutions at TransUnion. “But all of this digital progress will be wiped out if we can’t remove these barriers to building bilateral digital trust. For instance, 72% of South Africa executives in the study who said their company changed their digital transaction process because of the pandemic experienced glitches."

The report, “New Dimensions of Change: Building Trust in a Digital Consumer Landscape,” included responses from 170 executives from South Africa and 1,440 executives in Brazil, Canada, Chile, China, Colombia, the Dominican Republic, Hong Kong, India, the Philippines, the U.K. and the U.S.. The research uncovered how technologies like artificial intelligence (AI), national digital IDs[1] and super-apps[2] can help overcome hurdles and possibly create new challenges to building digital trust.

Artificial Intelligence (AI), Biometrics and National Digital IDs Will Play an Increasingly Important Role in Fraud Prevention

Overwhelmingly respondents answered that: 1) biometrics[3] will be the dominant payment customer authentication method; 2) improved fraud detection and security is the greatest benefit to using AI; and 3) a national digital ID system will help prevent consumer fraud.

Approximately 91% of South African (and 85% of global) executives say biometrics are likely to be used to authenticate most payments in the next 10 years. About 43% of South African (and 43% of global) respondents noted that improved fraud detection and security is the greatest benefit to using AI. This was the top selection by far, with smoother customer experience being the second most used answer globally at 29% worldwide and 35% in South Africa. Furthermore, most executives, 74% in South Africa and 79% globally, think national digital IDs will help fraud prevention in consumer transactions.

“Ensuring consumer trust starts with preventing fraud. Our research overwhelmingly showed that biometrics, AI and national digital IDs aren’t just a fad for consumer fraud prevention. They are key for trusted commerce for the foreseeable future,” said Keith Wardell, director for product at TransUnion Africa.

National Digital IDs Hold the Key to Economic Inclusion

Seven in 10 executives globally - and 71% in South Africa - believe a national digital ID gives low-income groups access to consumer services they would have previously been excluded from. By industry worldwide, respondents from consumer lending and telecommunications more often think such IDs give lower-income groups access to services they might otherwise lack. Both industries have led the way over the last decade in reaching the community of financially-underserved customers, manifested in innovations like microfinance and mobile money.

Executives Believe Consumers are Comfortable Sharing Personal Data

About 73% of South African (and 73% of global) executives believe consumers are comfortable sharing personal data with private companies. Nearly 71% of worldwide and 64% of South African executives believe consumers are comfortable sharing personal data with governments. Brazilian, Chinese and Dominican Republican executives have vastly differing views about whether or not consumers are willing to share data with private companies versus government bodies (more than 10% difference in each country between sharing with governments and companies). Chinese respondents believe consumers are much more comfortable sharing personal data with government bodies than companies. Brazilian and Dominican Republican executives have the opposite belief.

“Technological innovations like AI, biometrics and national digital IDs paired with proven fraud prevention methods like device intelligence can provide a more convenient and inclusive way for consumers to transact that still protects security and privacy,” Keith Wardell concluded.

For the survey findings and registration information for a Dec. 3 webinar about the study, go to the South Africa report website.

[1] National digital ID initiatives are government-administered programs to provide a digital identity to residents, often using biometric data to authenticate identity.

[2] Super-apps are single digital portals, predominantly accessed via smartphones, through which customers access and pay for third-party products and services.

[3] Biometrics are defined as fingerprint, facial recognition or voice authentication methods.