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Technologies for fighting financial crime

Technologies for fighting financial crime are being combined with human intelligence to create a powerful force for overstretched compliance teams. Our global survey revealed the extent to which organizations are maximizing these resources to root out corruption.

  1. A Refinitiv report on innovation and financial crime reveals that organizations are spending an average of four percent of turnover on due diligence checks.
  2. When asked about their adoption of technologies for fighting financial crime, a significant majority indicated they used cloud-based data and tools.
  3. A combination of leading-edge technology and trusted human experience has the power to help compliance teams maximize the resources at their disposal for fighting financial crime.

Our March 2019 global survey of more than 3,000 managers with compliance-related responsibilities revealed that a significant majority (72 percent) of respondents had been aware of financial crime in their global operations during the preceding 12 months.

Not only did our survey confirm that financial crime remains undeniably prevalent, the potential fallout is also of significant concern.

When asked about the expected impact of any association with financial crime, more than 40 percent of respondents expressed concerns relating to corporate value, investor confidence, reputation, restrictions on operations, and supplier relationships.

They believed there would be a significant negative impact in these areas if their organizations were deemed to have lax financial crime identification and preventative measures in place.

Such prevalent financial crime coupled with the potentially devastating consequences of corporate failure to detect and root out corruption point to a clear and urgent need for organizations to employ innovative solutions to tackle the problem with a fresh approach.

72% of respondents say they were aware of financial crime taking place in their global operations over the last 12 months

Due diligence checks

Our survey further revealed that organizations are already spending an average of four percent of turnover on customer and third-party due diligence checks as part of efforts to root out financial crime.

Despite this, more than half (51 percent) of external relationships did not have an initial formal due diligence check at the onboarding stage.

This situation is exacerbated by the fact that only 39 percent of respondents are monitoring transactions in real-time after onboarding.

These gaps in formal compliance procedures can allow financial crime to remain undetected, but given the substantial sums already being spent on crime prevention, simply adding more headcount or more budget are unlikely to be feasible options for most organizations.

It is therefore time to work smarter and maximize the effectiveness of existing resources — and technology holds the key.

Our latest innovation and The fight Against Financial Crime report revealed

Adopting new technologies

Many organizations are already adopting new technologies, both to enhance regulatory compliance and to prevent financial crime within their operations.

When asked about the technologies they currently use for financial crime prevention, a significant majority (79 percent) indicated that they use cloud-based data and technology.

In addition, 53 percent are embracing API technology, 51 percent natural language processing, 44 percent artificial intelligence and machine learning, and 44 percent blockchain.

Where these technologies are not currently employed, respondents overwhelmingly expressed an interest in using them, with only very low percentages of respondents saying they had no interest in one or more of these innovations.

Watch video: What is the key to turning the tide on financial crime using emerging technologies?

Faster onboarding times

While it is encouraging that an overwhelming 97 percent of survey respondents believe that technology can significantly help with financial crime prevention, there are also many other benefits on offer. The intelligent use of technology can:

  • Speed up processes
  • Reduce the strain on existing resources
  • Lower the incidence of human error
  • Allow organizations to onboard more customers
  • Result in faster onboarding times and a shorter time to revenue

Many leading-edge solutions are also highly cost effective, but perhaps most significantly of all, technology can enhance the client experience.

This view is widely supported, with 94 percent of survey respondents agreeing that the technology they use to detect financial crime is also enhancing customer engagement.

86% believe humans are a necessary asset to source trusted data and train algorithms to create effective outputs

Trusted human experience

Our research indicates that those who use technology to prevent financial crime are more likely to find success when carrying out onboarding checks than those who don’t, and organizations appear to be allocating their budgets in line with this finding.

Spending on customer and third-party due diligence checks is expected to increase by 51 percent in the next 12 months, and technology will be taking the lion’s share (38 percent), followed by people (34 percent) and process (28 percent).

Che Sidanius quote

Given the range of benefits that the right technology brings to the table when fighting financial crime, it is not surprising that many organizations are prioritizing their spending in this area.

It is, however, worth remembering that even the best technology should always be coupled with and augmented by human intelligence. Globally, 86 percent believe that humans are a necessary asset to source trusted data and train algorithms to create effective outputs.

In line with this, we believe that the strategic combination of leading-edge technology and trusted human experience has the power to help overstretched compliance teams maximize the resources at their disposal, root out corruption and turn the tide against financial criminals.

How can innovation turn the tide? Technologies for fighting financial crime