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Robert Harris’ latest blog discusses how we can expect unified FinCrime strategies to become common practice in the next five years and how this can be implemented by banks
Thursday 15 July
Read time: 3 mins
Businesses the world over have been faced with rising levels of opportunist criminals preying on vulnerabilities during the pandemic, and the financial services sector didn’t go unscathed. Our recent COVID Crime Index revealed that 74 per cent of financial institutions (FIs) in the UK and US experienced a significant spike in threats linked to COVID-19, while also faced with the need to cut IT security, cyber crime, fraud or risk department budgets by almost a third (26 per cent). While there isn’t a direct connection, this mirrors the criminal activity detected by FIs that had also risen by a third (29 per cent) since the start of the pandemic and a further 42 per cent of FIs said that the remote working model due to COVID-19 makes them less secure.

Challenges old and new

While these findings are major factors for FIs as they look at the year ahead and review their financial crime (FinCrime) strategy, they are also faced with the ongoing impact of the pandemic. Such factors have only exacerbated existing issues that pre-date the pandemic. Banks have long been faced with rising rates of fraud and cyber crime, regulatory hurdles and increasing operating costs, with the undeniable need to protect customers and safeguard their reputation and operations.
Such challenges, both historic and those newly introduced or exacerbated by the pandemic, are pushing banks to breaking point. Banks are looking to drive synergies between fraud, cyber and compliance functions to tackle FinCrime hurdles. Currently only a quarter of retail banks have adopted an integrated approach to FinCrime systems, according to a report by Ovum, highlighting the reality that there’s still some way to go.

Unified view of FinCrime and banking teams

Many banks have the best intentions, but with the combination of reduced budget, reduced resources, lack of visibility and rising rates of FinCrime, not all current solutions and strategies banks have in place are best placed to meet modern demands. In order to embrace a Unified FinCrime strategy, banks must work with each of these traditional teams to assess synergies, identify nuances and implement a strategy that focuses on the people, processes and technology.
For collaboration to be possible, each of the siloed departments will need to come together to make a unified FinCrime division to enable ad-hoc sharing and information collaboration. However for this model to be successful new ways of working to address FinCrime will need to be driven from the top down and embraced by the entire team.
In terms of technology, by automating the collection, standardisation, digestion and sharing of data through a centralised platform all areas of the unified FinCrime team are afforded a centralised view of the alerts and incidents flagged. This also reduces overheads, false positives and the potential for human error associated with the manual sharing of intelligence and allows for such data to be processed in real-time.
With a centralised view, investigators can spend time on high-value analysis, rather than low value data gathering. This is all possible through the unified central platform that brings in a high-volume of internal and 3rd party data sources.
The industry has become accustomed to the term FRAML that encompasses both fraud and AML strategies and operations. However, this strategy isn’t far reaching enough. The key to tackling FinCrime lies in data, and it isn’t just the fraud and AML teams that can benefit from data collaboration. A unified FinCrime strategy takes banks from viewing crime through the isolated lenses of the fraud and AML teams, and opens their view up to all customer touch points within an organisation. The more siloed systems that are brought together, the more malicious criminals are stopped in their tracks that pray on disjointed processes. 
In the next five years we can expect unified FinCrime strategies to become common practise, and some are already starting to introduce aspects of this approach in response to business and customer demands. Some banks have started to embed investigators within each of the siloed teams or referral processes, and instigate training around compliance issues for wider teams. Smaller Credit Unions, institutions and FinTechs are more likely to already have aspects of cross AML and fraud teams in action due to the need for individuals to cover multiple responsibilities as business grows. However, in reality, bigger banks may be slower to adapt due to the sheer size of their teams.

About the author
Robert Harris is Insurance Fraud Global Product Manager at BAE Systems Applied Intelligence

Banking Insights: How to define a long term Unified Financial Crime strategy insights tablet image

Complimentary report:
How to define a long term 'Unified FinCrime' strategy

This piece focuses on the historic hurdles faced by banks and the wider financial services industry, the state of play for the industry, the hypothesis for a unified FinCrime strategy and how it can be implemented across people, processes and technology.
But most importantly, how such a strategy can aid each specialist area within a newly formed FinCrime division. 
Download the report

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