Fraud and Financial Crimes Convergence: Data

This past year has been anything but normal, but one of the few things that has held steady is my advocacy around fraud and financial crimes convergence.

With the industry – and the rest of the world – going through so many changes, I teamed up with Julie Conroy, research director for Aite Group's Fraud & AML practice, to share our perspectives not only on why fraud and financial crimes convergence is important and quickly becoming the goal for many institutions across the industry, but also dive into how to make this a reality at your organization. Not only did I find the conversation with Julie to be thought-provoking as always, but it was also a lot of fun to film these remote location videos cross country during these no-travel pandemic times.

We’ve split this topic into three videos, each one focusing on data, technology, and people and processes respectively.

In this first video, we kick off the discussion by focusing on data.

Here’s an excerpt from the video, but be sure to watch the full video and the other two parts of the series:

TJ: Data is one of the key drivers of bringing together these worlds of financial crime and fraud. I think of it in three main ways. Any data scientist will tell you that the quality of the data helps significantly drive the performance of the analytics. More data and better quality data amounts to a better analytics end result. A key advantage of aligning and understanding the commonality and structure of your data is helping improve the overall analytics that are helping drive your fraud and financial crime functions.

I also think of it in terms of two other areas. One is from an operational efficiency standpoint. You have lots of conversations with your colleagues about data elements and what they are and what they mean. By having some institutional knowledge and common vocabulary, you drive a lot of efficiency.

The third area is governance. Where does the data come from? How has the quality been checked? How do we know the authenticity of the data? All of those aspects are important to get a common understanding and a common framework in order to help fuel convergence.

With all of this data, where would you suggest people get started?

Julie: All of this can be really intimidating for institutions. As we survey and interview financial institution executives, harnessing their data effectively is one of their biggest challenges, but also one of their biggest opportunities. If you can do that effectively, it can fuel and help leapfrog where your organization is today.

As you look at your opportunity, you first have to look at your internal data and find where you have common points between fraud and AML, how you can better cleanse the data, and how you can better perform entity resolution to get to a single view of the customer. All of that is essential to maximize your opportunity and then bring that data effectively into your analytics.

You’re having lots of conversations, in some cases, with the same people we are talking to. As you look at the opportunity for data for fraud and AML to collaborate more, where do you see the greatest opportunities and low hanging fruit?

TJ: When it comes to the combination of data, you can have structured and unstructured data. There may be areas of the organization that are very effectively leveraging unstructured data, things like text and other aspects, and then of course there is just the pure structured data. Things like payment transactions can be well-structured types of information, but in many instances, different parts of the organization have different access to those areas. 

For example, you may have part of the organization looking at data from a structured standpoint, looking at transactions in real time – instantly – as they are happening, where another part of the organization doesn’t have access to those transactions until a particular cadence. That could be once a week or once a month while the information is batch uploaded to another system.

A lot of times by looking at those kinds of things, people can effectively leverage the power of their organization. Start by looking at what other parts of the organization have already solved and how that comes together.

A lot of this can seem overwhelming, check out the video above to hear where Julie recommends that you start as well as the rest of the fireside chat. Be sure to come back to watch the other two videos in the series --- I think you’ll find the whole series enjoyable.