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Fraud and Financial Crime Convergence

I recently had the honor of participating in a session on Fraud and Financial Crimes Convergence at the Aite Financial Crime Forum.  The insightful panel included Chuck Subrt from Aite, Heather Allen from Peoples Bank, Erick Kraus from FIS and Brent Wellington from Ally Bank.

For those of you that missed it, and even those who caught it but want a refresher, here are a few key learnings from the event.  

Convergence: It’s Really Happening

The title of the panel asked, “Is There a ‘There’ There This Time Around?”  I’m excited to share, the industry is rallying around convergence of fraud and financial crime management, and the opinions shared by my colleagues on the panel confirm it.  Across the group, we identified several factors that make this time different:

  • Many in the industry have long thought that convergence requires merging of the actual teams involved and being co-located. Now there is a growing understanding that convergence is more about communication, process, and technology infrastructure, making the required changes more accessible.
  • Technological advancements — including the proliferation of cloud deployment, the accessibility that SaaS provides and the significant gains to be had from deploying advanced AI and machine learning — have spurred institutions to take actions towards convergence.
  • Growing pressure from regulators has incentivized financial institutions to put even greater focus on tapping into innovative ways to combat fraud and financial crime more efficiently and effectively.
  • With convergence being an industry topic over the last few years, there is a better understanding of the benefits, which include better harnessing data with the elimination of silos and a substantial reduction in operating costs due to not having overlapping software functionality.
  • The industry is looking more broadly at what areas can be converged. There is also excitement about converging fraud and financial crimes with cybersecurity, which only heightens the benefits.
  • The recent surge of real-time payments across the globe means that not only are customers moving money faster, but criminals are too – furthering the need for a centralized solution that enables a clearer view of crime.

For more details, check out my post from earlier this year, Fraud and Financial Crimes Convergence: It’s Really Here!

Technologies Financial Institutions Should Focus On

I recently confessed in a post that I’m late to adopting person-to-person (P2P) payments. The growth in that technology and other forms of real-time payments has created more data than ever for us to harness, which is why the panel recommended focusing on technology that can help you best leverage that data.

The key is to start with a strong foundation that allows you to share data across functions. From there, I encourage you to ensure your solution has both flexible data ingestion along with robust data profiling, and open machine learning.  This enables your data scientists to have the flexibility they need to build the models they want, and robotic process automation to ensure you are eliminating low-value tasks while gaining the optimal efficiency.

How Does My Organization Get Started?

Converging fraud and financial crime functions can feel overwhelming, but of course, there is only one way to eat an elephant – one bite at a time.

Focus on small steps that you can take today. Because of the silos that have been created in organizations, your fraud and financial crimes teams may rarely communicate. Start by having meetings between the two teams to get a better understanding of goals and areas of overlap to identify wins in the near term.

You don’t have to converge your entire organization overnight. Look at developing better communication among teams and ways to eliminate duplication of technology and data.

Follow me on Twitter @FraudBird for more updates on the latest fraud topics.

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