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Fighting financial crime with data

The digital revolution has provided consumers greater choice, convenience and lower prices, creating challenges for banks to combat fraud and financial crime.

Overview

Banks must demonstrate to three distinct groups—consumers, regulators and shareholders—that they can meet these challenges.

To do so, banks must manage and monitor vast quantities of data from a diverse set of sources. Given the increasingly large volumes of transactions and accounts to be monitored, they can find it difficult to handle the volume of information using traditional, linear data views.

However, new technologies and solutions, and an integrated approach can help banks and other financial services institutions create an integrated data set and bring sophisticated analytics to bear on the data, generating useful insights to detect and prevent financial crime.

The benefits of data consolidation and improvements are numerous. They support the people who work to prevent financial crime, lead to better customer service, can enhance a bank’s reputation and allow banks to obtain valuable insights and make informed decisions quickly and flexibly. With the rapid evolution of financial crime and the ever-increasing stringency of regulatory requirements, banks 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. The use of digital and mobile devices to access bank services and make payments, in particular, is growing rapidly.

The challenges for banks and other financial services organizations are considerable and they must be able to demonstrate their ability to meet these challenges to three distinct groups:

  • Consumers: Banks must demonstrate that they have adequate safeguards in place to protect confidential information and consumers’ assets.

  • Regulators: Banks must demonstrate 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: Banks must demonstrate that they can manage the monetary and financial risks from financial crime.

Analysis

To meet the challenges of the digital revolution, banks must manage and monitor vast quantities of data from a diverse set of sources. Maintaining the quality of this data in terms of accuracy, timeliness and other factors can be tough.

Given the increasingly large volumes of transactions and accounts to be monitored, it can be difficult to handle the volume of information using traditional, linear data views.

New technologies and solutions, however, can make it easier for banks to both, create an integrated data set and, bring sophisticated analytics to bear on the data—generating useful insights to help prevent and detect financial crime.

There are three major elements needed to make this happen:

  • Enhancing the quality of data. By defining the right data quality metrics, establishing centralized data screening and reconciliation, and improving data governance, banks can improve the quality of insights derived from the data.

  • Using analytics to transform data into information and information into insights. By understanding the data required, using technology to obtain the right data and analyzing the information to transform it into insights, banks can make data a strategic asset to drive both decisions and outcomes.

  • Applying data visualization techniques. By looking for visual patterns and identifying inconsistencies, banks can better analyze risks, and prevent financial crime and cyber-attacks.

Recommendations

There are numerous benefits associated with the consolidation of data and improvements in data quality. Data consolidation, for example, supports the creation of shared services and centers of excellence that, through focused training and skills development, can maximize the capabilities of the people working in financial crime prevention.

Financial services organizations that work to achieve a single view of the customer to help detect and prevent financial crime can reduce risks related to compliance and regulation, but they can also leverage their success to enhance their reputation and improve customer retention rates.

There are operational benefits to be realized, as well. Standardized enhancements in the account opening process—such as streamlining know-your-customer (KYC) due diligence—can lead to significant improvements in the customer experience.

Process changes can make it easier for customers to provide their information electronically or easier for the bank to re-use information that has already been provided. Along with enhancing the customer experience, these initiatives can also upgrade the quality of data.

By using big data technologies to provide centralized access to data—rather than centralized storage—banks can employ analytics to obtain valuable insights and make informed decisions quickly and flexibly. Banks and other financial services firms need this kind of agility and adaptability more than ever—given the rapid evolution of financial crime, and the ever-increasing stringency of regulatory requirements.

Authors

Heather Adams is a managing director with Accenture Finance and Risk Services in London, United Kingdom. She leads the ongoing delivery and development of Fraud and Financial Crime business services, defining and developing capabilities to support clients in their fraud and financial crime prevention efforts.

Adams has extensive experience in delivering large-scale complex business change for banks and has worked with senior leaders to define and implement fraud and financial crime prevention strategies to drive high performance.

Prasanna Varadan is a senior manager with Accenture Finance and Risk Services in Chennai, India. Varadan has more than 12 years of consulting experience in financial services and risk management. He has worked with global and regional financial service firms across Africa, Asia Pacific, Europe and North America to transform their businesses and risk capabilities.

His specialized experience in risk management, regulatory compliance, liquidity risk and operating model strategy helps Accenture create differentiated, industry specific offerings to help clients become high-performance businesses.

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Financial Services