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Banking cyber security: How data consolidation can help

Accenture offers insights into using data integration for cyber security, as well as improving business agility and effectiveness.

Overview

The digitization of global commerce has given consumers greater choice, greater convenience and lower prices, but has also created enormous opportunities for the perpetrators of fraud and financial crime. More than half of financial services firms have said spending on financial crime prevention and reputation management has increased by over 20% in recent years, at a time when there is a sharp focus on cost management in every sector of the business. In order to mitigate these effects, banks need a more integrated view of relevant data, including that which has in many cases been stored and processed independently by division, channel or geography. Three elements are key to success in data integration: high quality data, useful analytics, and data visualization.

Integrated data can be leveraged to develop a more unified approach to business, providing valuable insights and driving rapid, informed decision-making. Given the rapid evolution of financial crime and the ever-increasing stringency of regulatory requirements, banks and other financial services firms need this kind of agility and adaptability more than ever.

Background

The digitization of global commerce has given consumers greater choice, greater convenience and lower prices, but has also created enormous opportunities for the perpetrators of fraud and financial crime: regulators such as the Bank of England rate cyber attacks as the biggest threat to the banking system. The increasingly sophisticated techniques used by cyber criminals have led financial services organizations to pursue new approaches to preventing and detecting such activities, while also dealing with a host of new regulatory initiatives.

The challenge for banks and other financial services organizations is considerable. They must be able to demonstrate to consumers that they have adequate safeguards in place to protect the consumers' confidential information and assets. They must also be able to demonstrate to regulators that they have active programs in place to prevent financial crime, with controls that are robustly enforced and standardized across business units and geographies. Shareholders must also be assured that banks can manage the monetary and financial risks from financial crime.

More than half of financial services firms have said spending on financial crime prevention and reputation management has increased by over 20% in recent years, at a time when there is a sharp focus on cost management in every sector of the business.

Analysis

The management of vast quantities of data is one of the central challenges for banks in their efforts to battle cyber crime. Banks feed data from a diverse set of sources into centralized monitoring systems, and maintaining accuracy and timeliness—data quality—is demanding. In some cases, a bank's data strategy is not aligned with overall organizational strategy, and often data management is made more difficult by unclear demarcation of roles and responsibilities among the businesses, the IT function, and the fraud and financial crime units.

Ultimately, banks need a more integrated view of relevant data. To accomplish this, they will have to pool data that, in many cases, has been stored and processed independently by division, channel or geography. Although data integration is most effective when there is a central repository of customers—along with centralized systems—for many organizations this is not the case. Fraud management data, as well, is typically fragmented across layers of channel and product-based controls.

Recommendations

Given the large and increasing volumes of transactions and accounts to be monitored, it is often difficult—even for seasoned investigators—to handle the volume of transactions using traditional, linear data views. New technologies and solutions can make it easier to bring sophisticated analytics to bear on the data when it has been integrated. Three elements are key to success:

  1. High quality data: the quality of insights derived from any analysis will be highly dependent on the quality of data provided.

  2. Useful analytics: most organizations have sufficient data, but analytics can increase its information yield which may, in turn, help the organization understand the risk posed by a specific prospect, customer or transaction.

  1. Data visualization: As the volume and complexity of data increase, a visual interface more effectively reveals patterns and inconsistencies.

In addition to managing the effects of financial crime, data consolidation and quality improvement provide other benefits to an organization: consolidation of data supports the creation of shared services and centers of excellence, and can be leveraged to enhance reputation and improve customer retention rates. Ultimately, a more integrated approach permits valuable insights and rapid, informed decision-making. Given the rapid evolution of financial crime and the ever-increasing stringency of regulatory requirements, banks and other financial services firms need this kind of agility and adaptability more than ever.