Streamlining fraud detection and anti-money laundering (AML) processes is essential in fighting financial crime faster and more effectively. We heard this message loud and clear at Finovate in New York City this week, as we have from banks and financial institutions worldwide. This post is the first in a series exploring important new themes that are emerging in the rapidly changing financial crime arena.
At Finovate, the big news was that FICO Falcon X delivers AI and machine learning technology in dramatically new ways, helping to prevent new forms of fraud and financial crime growing rapidly along two vectors:
- Real-time payments, including many offerings from fintechs in person-to-person (P2P) and business-to-business (B2B) categories.
- Other innovative products that banks are bringing to market to meet changing consumer expectations and realize their own digital transformation strategies.
The real-time financial crime threat is real. The fact that real-time payments are immediate and often irrevocable has given rise to more sophisticated criminal threats in digital interactions such as person-to-person transfers and mobile payments. Institutions need fraud detection capabilities of the utmost speed and accuracy to detect and prevent criminal activity during real-time transfers of funds.
The Convergence of Fraud and Compliance
The convergence of fraud and financial crime detection in Falcon X gives our customers the agility required to more quickly identify the constantly shifting webs of actors, institutions and transactions that perpetrate financial crime.
The convergence of fraud and compliance also represents a significant cost savings opportunity; there is an estimated 80% overlap in the data processing, systems maintenance, and ongoing administration feature set of legacy systems needed to support these functions independently. A single platform to support both functions not only enables associated cost savings, but other synergies based on shared insights and detection effectiveness, as well. A recent Ovum survey showed that this is exactly what financial institutions are moving toward.
As banks and fintech organizations ramp up their operationalization of AI and machine learning, Falcon X (which runs on Amazon Web Services), accelerates the timeline. For example, banks’ data scientist teams can now build machine learning models using open source machine learning libraries such as R, Python, and H2O. With Falcon X, users have the choice of leveraging FICO-authored algorithms, or enabling their in-house data science teams to build and deploy their own models with FICO’s Financial Crimes Studio, an integrated AI laboratory that allows users to author, deploy, and monitor their own analytics within the Falcon X platform.
Whether clients choose to leverage FICO’s analytics, home-grown algorithms, or a combination, Falcon X provides the resilience, scale, and flexibility needed to address emerging and evolving fraud and financial crime threats.
Soaring in the Fight against Financial Crime
Julie Conroy, research director at Aite Group, summed up the FICO® Falcon X launch with: “Financial institutions and fintechs around the globe are heavily investing in machine-learning analytics to help balance risk mitigation with the customer experience. The ability to democratize the development and deployment of advanced modeling capabilities is a top priority for many firms so they can keep pace with the rapid evolution of fraud and money-laundering attacks. Falcon X provides the key tools to address these needs and empower banks and fintechs to respond rapidly to evolving crime patterns.”
Armed with Falcon X, Team FICO will continue to help our customers succeed in the fight against all types of financial crime, in real time. Follow me on Twitter @dougoclare to keep up with the latest developments.