Financial institutions must transform compliance strategy to a digitised world and a holistic and transverse mindset can in some financial companies be perceived as a major challenge. However, change is necessary, and new technologies can accelerate the change.
With trust comes great responsibility. Moreover, in a world driven by rapid development and staggering complexity, the financial sector has a great task ahead with crucial data at stake. Millions of consumers are affected by fraud and cybersecurity threats, and financial institutions face challenges to fight back these threats that are becoming increasingly sophisticated, while transaction volumes are rapidly growing. Fraud prevention and security as we know it is becoming increasingly important.
Financial institutions meet growing demand for instant payments and a growing number of digital solutions and payment transactions happening at the speed of light. Traditional fraud and AML mechanisms are ineffective in the new digitised world, and the regulatory authorities introduce new complicated requirements that have significant implications on corporate budgets,” says Michael Jacobsen, Business Development Manager CGI in Denmark.
It can be a costly affair to be compliant. According to Jacobsen, up to 30 per cent of a company’s IT spend is allocated to compliance. However, the consequences can be even more severe. In the worst case, lack of compliance can result in insurmountable costs in the form of fines, loss due to fraud, loss of customers and loss of reputation. It is a challenge for every single company in the financial sector.
“Many solutions we see today are fragmented and run by old legacy systems. This is due to silo thinking in many large corporations. Often companies tend to look inward and are unaware of the potential of sharing information internally. A more holistic, cross-department approach and a comprehensive solution to compliance is needed. The efficiency of AML (anti-money laundering), and anti-fraud solutions will increase trust significantly, while considerably reducing costs,” explains Jacobsen.
Fighting financial crime with AI
Fraudsters change their behaviour according to the change happening in the sector, and customers demand a fully digitised, real-time service utilising the latest technology.
International banks facilitate around five to six million payments every day. About 10 per cent of transactions are flagged as false positive alerts – meaning that the it-systems detects suspicious activity. Every time a transaction is flagged, it costs the company resources in manual work.
“New technologies such as machine learning, artificial intelligence, advanced and predictive analytics have the potential to help some of the world’s largest banks and insurance companies comply with regulatory requirements – and protect both businesses and their customers from fraud. The companies must apply systems that are constantly learning and training their ability to detect suspicious activity,” says Jacobsen.
CGI has a Software-as-a-Service solution built on the newest technology, that can identify suspicious activity. Today, CGI is one of the leading suppliers with their HotScan360 solution helping companies prevent fraud and protect customers’ money and data through a comprehensive fraud, AML, TM and KYC solution. More than 64 per cent of all currency transactions in the world flow through and are monitored by the HotScan360 solution.
“Companies must ensure that they can be an effective organisation while still balancing, managing and controlling risk. New technologies such as AI can help the largest banks around the world identify and prevent suspicious payments,” Jacobsen says.
The solution is developed in close collaboration with some of the world’s leading financial companies, and more than 80 international customers are using HotScan360. The software applies advanced algorithms and is constantly improving its ability to identify risks of suspicious activity through built-in self-learning functionality.
“If you are a bank and facilitate real-time payments, it is important that you have an infrastructure that can discover new transaction patterns immediately. No manual workforce can follow the speed of the fraudsters,” Jacobsen concludes.