The dynamic and interconnected world of global ecommerce, crypto currencies, and alternative payments places increased pressure on anti-financial crime measures to keep pace and transform alongside these initiatives. Consumers worldwide are projected to use mobile devices to make more than 30.7 billion ecommerce transactions by 2026, a five-fold increase over the 6.1 billion predicted for 2022. At the same time, synthetic identity fraud, including the use of personal identity information from children, is estimated to comprise 85% of fraud cases.
A potential recession layered onto already uncertain times creates an opening for criminals. Historically, the evolution of a technology use, such as an increased adoption of digital financial services or the introduction of a new payment concept, has created an opening for illicit behaviors. Early on in the pandemic, the Bank for International Settlements (BIS) issued a brief focused on anti-money laundering (AML) and cyber threats. It cited the large percentage of the workforce working remotely as creating potential risks for IT networks, and the new risks created by the necessity to conduct financial services online, including people less familiar with the protocols. Since there will always be innovation (and probably turmoil to some degree), the fight against financial crime is a never-ending battle.
Financial services providers respond with advances in AI
While governments and regulators globally are trying to improve and evolve the education and requirements related to financial crime, the primary burden is placed on financial services providers. They must try their best to prevent financial crime, and as with many other initiatives the advancements in fighting financial crime are found in maturing the use of data and AI.
Our customers utilize our hybrid data platform across a range of anti-financial crime efforts such as fraud prevention, know your customer (KYC), and AML. They are continuously refining and tuning, using a combination of machine learning models, predictive analytics, and neural networks to predict suspicious behaviors. Rules are informed by models that can be adjusted dynamically when new fraud schemes arise. This all helps efficiently manage and allocate resources by reducing false positives. Many of our customers start with a fraud focus and evolve the use of the hybrid data platform to advance other use cases based on the foundation they have in place. Our latest ebook highlights some of the advancements accomplished by UOB, Regions Bank, BRI, and Santander.
We must keep improving
Financial services providers can never stop innovating in the battle against financial crime.
- Regulators: The regulators will keep pushing with well-intended efforts. The multi-national Multilateral Competent Authority Agreement (MCAA) and the US Corporate Transparency Act are aimed at improving anti-money laundering efforts. They are also keen to educate challenger banks and fintechs and help them navigate the rules to avoid unknowingly helping the criminals.
- Financial Loss: Bottomline, financial services providers need to minimize losses.
- Brand Reputation: The unpleasant experience of fraud and how well it is or isn’t handled hits a financial brand directly. When fines levied against an organization are splashed through the media, it does not help an organization win customers.
As innovation in financial crime advances with the innovations in financial offering, data, analytics, and AI are critical weapons. And as economic downturns loom in various world economies, it is critically important to ensure you have a comprehensive prevention strategy in place.
Read our latest ebook to learn more about fighting crime using data and analytics.