Category: Digital Trust

Insights from RAG Digital Trust Survey, in collaboration with Subex

On October 26, 2021, Subex hosted their 17^th User Conference where Eric Priezkalns, CEO of Risk and Assurance Group (RAG) gave viewers and participants a sneak-peek into the RAG Digital Trust Survey 2021.

Sponsored by Subex, this year’s survey was the biggest and one of the most comprehensive industry surveys, covering 185 risk professionals working for telecommunications providers across Business Assurance, Fraud Management, and Cyber Security. The survey comprised 16 carefully defined questions, selected by a global panel that included risk experts from every continent. Last year, a similar survey was conducted by RAG on revenue assurance and fraud.

An interesting observation from this year’s survey is that telecom providers are increasingly diversifying their services. A sizeable number of responses came from telcos that are fixed-line providers, Internet Service Providers (ISPs), and direct-to-home providers. On another note, among all the mobile network operators that responded, over 80% also provide mobile money services.

This year’s survey threw up some other interesting trends compared to last year, which are highlighted below:

1. 4.9% increase in total operational leakage value

This year, the total operational leakage suffered by CSPs is US $149 billion across all fraud and non-fraud leakages, which was US $142 billion last year. As per the S&P Global report, digital transformation is expanding risk areas for CSPs due to the following reasons:

Demand for data is rising with the introduction of new-age products and services

Competition and complex product structures limit profitability improvements

Capex is rising with the launch of new technologies and digital disruption

In 2020, telecom providers suffered losses equivalent to 2.92% of revenues as a result of errors and mistakes that did not involve fraud. 2.59% of revenue was lost from frauds and other crimes and 2.80% of revenue from frauds related to customers of CSPs. Comparatively, the chief culprit of revenue leakage in 2021 is security breaches, contributing to about 3.3% of total revenues while cost leakages accounted for 2.7%. Fraud and similar abuses are responsible for 1.6% of losses. The cost of fraud to customers of CSPs stood at 1.8%.

2. Investment in technology emerges as a top challenge for CSPs

In terms of challenges, this year’s responses were evenly balanced four areas for technology investment, executive sponsorship, finding skilled people to work in our team, and connecting with people in other departments. Still, 34% of respondents marked technology investment as the topmost challenge in the 2021 RAG survey, a jump from its second position in last year’s survey. Executive sponsorship had dipped from its peak of 37% in 2020.

According to IDC, the big data and analytics market is expected to grow at a five-year CAGR of 12.5%. The analytics market size is expected to become a US $500 billion industry by 2025. Currently, around 32% of new enterprise applications are cloud-native. The offerings of the 5G universe like virtual sports, video gaming, AR packages, virtual studios, etc., can be potential game-changers in an operator’s revenue mix. But, the multi-layered impact of digital transformation is evident in the fact that digital 5G business models have much shorter revenue cycles – and higher risk – when compared with traditional telecom offerings!

Thus, with technology investment being a top challenge, how committed are CSPs to enabling technologies such as ML, RPA, and blockchain for their evolving business models? The next trend tells us more.

3. Machine learning usage has doubled. 

Compared to last year, telecom providers using machine learning as an established technology has more than doubled, increasing to over 14% from 6%.

A 2020 TMForum RA survey showed the different ways in which telecom providers are improving risk coverage. One finding is that more than 32% want to use AI/ML for predictive and descriptive decision-making, and to manage challenges related to incident management, automatic creation of business rules, thresholds, process mining, and more.

This year, as per the RAG survey, more than twice the number of communication service providers are maturing their use of machine learning in the risk function. Overall, 26% are in some stage of implementing ML. However, 45% do not deem machine learning useful or affordable, while around half have surefooted plans to leverage ML to mitigate operational risk.

The important point to note here is that half (45%) of the risk functions as per the responses that are not planning to use machine learning is higher than last year.

4. Telecoms are losing revenue due to bad debt. 

Improper revenue assurance is costing telecoms sizeable revenues. Out of all RA areas, bad debt is ranked as the main avenue of revenue and cost leakage for 31.7%, a hike of over 3% from last year.

While major system and operational challenges lead to bad debt, these also affect the recovery rates and the treatment of subscribers. According to one study, addressing the challenge of customers not paying their bills requires high follow-up costs in collection efforts and acquisition commissions that become a tremendous overhead for a telecom operator.

Other leakage areas like usage, rating/tariff, and subscription fee errors are similar to last year, with an average of 10% responses. On the other hand, the leakages like excess operating cost, stranded assets, and network/system outages have meagre impact.

5. IRSF, bypass, and SIM-box are the biggest fraud areas

IRSF fraud is the main contributor to the increasing fraud leakage for CSPs as well as customers. Compared to the last year, the proportion of fraud has also increased across areas like network asset/equipment fraud and denial of service attacks. Closely trailing IRSF are other top frauds like bypass, sim boxing, and commission fraud.

On the bright side, the costs of fraud arising from piracy of digital content, subscription and identity fraud has dropped since last year.

Opportunities for Telcos

Comparing the differences in fraud and revenue trends between 2020 and 2021, it is clear that telecommunications providers have significant room for improvement across areas of customer service, regulatory compliance, and operational savings.  In the 5G era, there are already high industry investments and programs to define, develop and deliver systems and specifications for the fifth generation (5G) of mobile systems and services.

The quantity of data passing through 5G networks is exponentially higher, increasing the complexity of correlating this data across multiple data points for customers, service, and usage. Adding to this is the challenge of managing different user identities, Network and SLA adherence, and the differentiated quality with network slicing and API integration services coming with 5G. All of these demand an evolution of the existing Risk mitigation methods to mitigate the vulnerabilities in 5G-based models. The AI-led Risk mitigation in the 5G era will open avenues of innovation and breakthroughs through automation and machine learning-driven Decision-making. This will empower Telecom operators to be effective and achieve Operational excellence, uninterrupted service experience, and profitability.

See how Subex helps telecom stay ahead of risk with its cutting-edge business assurance solutions

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In the post-pandemic world, one technology enabler that will witness the greatest level of adoption is the Internet of Things. We have reached an inflection point in the IoT adoption journey and are now staring at a hockey stick growth curve in terms of the number of endpoints and use case diversity. So is it a smooth journey from here on? The answer unfortunately is a no.

Security: the foundation of digital trust and exponential growth
To capitalize on the demand for IoT-enabled data, various stakeholders often overlook security. This creates an enticing environment for hackers to exploit leading to multiple problems in areas such as return on investments and value accretion. IoT devices operate on the cusp of real and virtual worlds and with security being accorded little or no priority, these devices turn into conduits for hackers to enter, exploit, and exit at will. Such devices can also be used by hackers to launch Denial of Service attacks on third-party infrastructure causing more damage while attracting legal ramifications.

Subex’s research has shown how hackers latch on to IoT projects at a very early stage such as proof of concept or pilot and stick around to monitor the networks patiently waiting for data or asset of interest to appear on the network or the connected infrastructure. They also deploy a range of malware and trojans to keep the network under watch for long periods.

Such challenges can create trust concerns for various stakeholders including end-users, investors, employees, and vendors. Thus, security concerns must be addressed not just according to compliance norms but as per the prevailing threat environment and projected changes in this environment in the near term and future. Creating an environment of digital trust in an IoT project requires investments and a deep understanding of the threat environment and its implications.

Improving digital trust in the IoT world can lead to a range of benefits. To begin with, projects at various stages will benefit immensely as the improved security posture will help ensure disruption-free operations and thereby improve stakeholder confidence. Start-ups can expect more access to funding options and innovative projects in established businesses can expect to mobilize more funds from internal sources.

On the whole, the digital economy of a nation itself can stand to benefit from such granular attention to IoT security and digital trust. Today, many vital business streams and infrastructure sectors are relying on IoT to some measure and this dependency will increase in the days to come. Investments in IoT security will help guide better outcomes for these streams and sectors thereby having a cascading effect on the economy.

Important considerations for improving IoT security outcomes and digital trust

• Align security needs to the highest internal standards
• Invest in devices and other infrastructure components for value rather than cost savings
• IoT security should be viewed as a conduit for enabling digital trust
• All stakeholders should be sensitized towards security mandates and considerations
• Building digital trust should be an ongoing exercise with investments, resources, and attention coming from all stakeholders at all times
• Opportunities for improving security posture should be a key area of attention

Why Your business needs a Chief Trust Officer (CTrO)?

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Over the last decade, the term digital transformation has gone from being hyper-cool to being overused, and with born-in-the-cloud businesses now taking the center stage, there will perhaps be no need for ‘transformation’ one day. That said, all of the transformation that has happened has clearly led to a massive increase in the amount of data being generated and used.

Being digital is great. It brings about agility, reliability, new revenue streams, better CX, more meaningful decisions, and a ton of other good things. However, it also brings with it the aspect of vulnerability and risk, the stakes for which are extremely high. In fact, here are some points for you to ponder over:

• Over 1.7 MB data is generated per person per second, and 2.5 quintillion bytes of data are created every single day. But, do we trust the integrity of this data?
• Partnerships and ecosystems are expected to unlock $100 trillion of value for business over the next 10 years. But do we trust our partner ecosystem?
• More than 50% of the global population is currently online. Do we trust all their identities?

Clearly, while the transformation to a digital world has opened up a barrage of new opportunities, there is one element that remains unaddressed (at least partially), and that is ‘Digital Trust’. Businesses have realized the importance of Digital Trust, and have initiated numerous initiatives in pockets to address it, but it is not yet a mainstream trend to have an executive appointed as the Chief Trust Officer (CTrO), who is responsible for all things related to Digital Trust.

Now, if your organization already has a CTrO, then congrats, you’re one of the forerunners! However, if you are not one of those organizations who has made a decision yet, here are 5 reasons why you should onboard a CTrO.

1. Digital Trust is beyond security (Just CISO is not enough!)

The common misconception is that Digital Trust == Security. However, in the digital world, there are so many variables at play that the concept of Digital Trust extends way beyond security, and goes into the realm of Privacy, Identity, Risk, Credibility, Predictability just to name a few. This means that the CISO of your organization is only responsible for one element of Digital Trust, leaving out numerous others unattended. Of course, some organizations have taken the route of naming Chief Identity Officers and Chief Privacy Officers, along with CISO, but given that those elements simply tie up to Digital Trust, it might be best to simply have a CTrO in place.

2. Trust initiatives will become mandatory

As more and more businesses begin to understand the importance of Digital Trust, there is an increasing amount of emphasis laid on Trust as a determining factor to do business. A recent survey by IDC showed that by 2025, two-thirds of the G2000 boards will ask for a formal trust initiative that executes a road map to increase an enterprise’s security, privacy protections, and ethical execution. What this means is, if your business has to stay in the game, and even just pursue opportunities, you will need to have trust initiatives in place, and obviously someone to drive them.

3. Digital Trust will be the strategic differentiator

Competitive differentiation is extremely transient in the digital age. What is niche today, soon becomes commoditized, and businesses are in a constant search for that factor that keeps them ahead in the game. In such a scenario, Digital Trust will emerge to be the single-most-important factor to help organizations differentiate themselves. Hence, a key stakeholder that will be responsible for infusing Trust in the ecosystem.

4. The concept of Digital Trust has an evolving roadmap

Today, there are varied definitions of Digital Trust, with different scope and levels of coverage. It ranges from covering just security in its simplest form, to including multiple intangibles like transparency, credibility, reputation, etc. in some cases. What is important to note is that the fluidity of the concept of trust makes accountability and ownership difficult. The best way to craft a Digital Trust roadmap for your organization, and make sure you execute it – get a CTrO!

5. Trust is non-replenishable

They say it takes a lifetime to build trust, and a moment to break it, and forever to repair it. This statement holds good in the business context too. There are numerous instances of brands losing all credibility and reputation because of a single breach of trust, and in most cases, it is extremely hard to win the trust of customers back. In fact, a recent study by Edelman shows that 45 percent of consumers said that a brand would never be able to regain their trust after it displays unethical behavior or suffers a controversy, while 40 percent said they would stop buying from that brand altogether. All this only further cements the role of a CTrO as an extremely important one and makes it non-negotiable for organizations to have one.

So, how is your organization approaching Digital Trust? Is it one of the strategic priorities? Are there people specifically responsible for it? Is there a plan to get a Chief Trust Officer in place? Let me know your thoughts in the comments section below.

Meanwhile, if you’re interested to read more about Digital Trust, you’ll find some useful material here.

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With the rapid acceleration of digitization driven by an unprecedented catalyst named COVID-19, the topic of Digital Trust seems to have become even the more relevant to digital businesses today. Interactions behind digital curtains require a high level of trust to be established between the parties involved, and this is easier said than done. At Subex, our priority lies in helping businesses establish trust within their digital ecosystem, and over the last few months, we have closely analyzed the market, spoken to multiple leaders, analysts, policy makers, media and influencers to understand the trends that are shaping the evolution of Digital Trust, and this blog is an attempt to outline the same.

1. Digital Trust is becoming a board room priority

Increasingly, a lot of leaders are talking about Digital Trust, as businesses start to realize the strategic importance of the term. A few years ago, perhaps only the visionaries and the trendsetters picked up and acted on Digital Trust, as many leaders were yet to see a direct correlation between a concept like trust and their bottom line. Things however have significantly changed with the onslaught of digital services, and at this very moment, Digital Trust is one of the top priorities for all CxOs globally.

2. Digital Trust extends beyond security and privacy

The concept of Digital Trust began with a small scope. In its original form, it probably covered only the areas of security and privacy with its relevance being limited to only data breaches and misuse of consent. However, the current form of Digital Trust is a wider topic spanning across different areas like identity, risk mitigation, predictability, and data integrity, along with privacy and security.

3. Consumer awareness about Digital Trust increases

Until a few years ago, Digital Trust was probably a topic that the average consumer didn’t grasp quite well. There was ambiguity around the topic, and this was compounded by the fact that organizations and leaders were yet to address this as a key priority. This however has changed in the recent times. Today, consumers are a lot more informed about the concept of trust in digital businesses, and make conscious decisions based on an organization’s ability to demonstrate a trustworthy ecosystem.

4. Enterprise angle to Digital Trust becomes prominent

Another significant trend that is beginning to surface is the increased relevance of Digital Trust in the enterprise scenario. Typically, because of the ‘privacy and security’ play of Digital Trust, the topic was perceived to be largely relevant to the consumer segment, pushing only B2C businesses to heavily focus on it. However, with the expansion of the scope of Digital Trust to cover important areas like identity, risk mitigation, predictability, and data integrity, the topic has become extremely relevant to B2B and B2G (government) side of the business too.

5. Lack of trust begins to show quantifiable impact

We discussed in an earlier point, that consumers are now making conscious decisions based on an organization’s ability to demonstrate a trustworthy ecosystem, and this is beginning to show measurable impact on the subscribers and revenues of digital businesses. In addition to this, a continued demonstration of trust has been known to subconsciously influence the decisions of consumers, as discussed in this blog.

“Digital Trust is an essential promise we make and deliver to all our stakeholders.” This is a statement that was made by the CEO of an APAC operator when we were interviewing him recently, and it perhaps best sums up the view of digital businesses today towards trust.

To know more about the definition and significance of trust in a digital ecosystem, read our PoV on the topic

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Digital Trust is a concept that enables users to carry out business transactions in a safe, secure, ethical and reliable manner.

In a digital world, everything is ultra-fast and instantaneous. Agility, and speed are perhaps the two key benefits of living in an all-digital world and are probably the most desirable qualities of a digital interaction. However, the digital nature of today’s businesses has brought about significant changes in business models, technology enablers and customer expectations. Amidst all these rapid changes, if there is one thing that has remained constant, it is the need for trust. However, the concept of trust was different in a physical world, and it is more fluid and continues to evolve in a digital world.

Trust underpins the success of every business, traditional or new age. Each transaction and interaction on a personal, societal and business level requires the establishment of trust. With the advent of digital disruption, the lines between digital and physical worlds begin to blur, and the contextual definition of trust also evolves accordingly. Unlike in the physical world, trust in the digital world must be established spontaneously between entities that often are unrelated to each other, and this trust must be constantly examined and re-established during the course of the interaction.

Conventional models of trust are not flexible enough to meet the demanding requirements of digital interactions due to the high number of different relationships — often sporadic and short-lived — between different people, businesses, things, AI programs, machine learning algorithms and other entities.  Digital Trust is an evolution of traditional models of trust to cover a larger set of requirements of digital businesses by arriving at levels of measurable confidence to make risk-based decisions.

For enterprises, Digital Trust needs to be an all-encompassing concept, being multi-directional, and multi-dimensional. This means for a business to establish great levels of Digital Trust, it needs to demonstrate trust between consumers, shareholders, partners, vendors and governing bodies. More importantly, this trust needs to be multi-directional, meaning it is as important for enterprises to be able to trust their consumers as it is for consumers to trust the enterprise.

Currently, Digital Trust covers six key areas, namely, privacy, security, identity, predictability, risk mitigation and data integrity.

Privacy: The ability to carry out a transaction while not dipping into personal information that is not necessary for the transaction.

Security: The ability to carry out a transaction in a manner that protects the infrastructure and data of the transacting parties from malicious threats.

Identity: The ability to protect the true identity of the stakeholders of a transaction unless it is exposed with the full consent of the entity.

Predictability: The ability to be able to extract meaningful insights and make scientific forecasts, to foresee business risks and support planning.

Risk Mitigation: The ability to identify, evaluate, and prioritize risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability or impact of unfortunate events or to maximize the realization of opportunities.

Data Integrity: The maintenance of, and the assurance of the accuracy and consistency of data over its entire lifecycle.

Given the market dynamics where trust is at an all time low, businesses can truly unlock their potential by focusing on the above mentioned tenets of Digital Trust.

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