Kathy Gibson reports – Fraud and financial crime are a fact of life for bankers.
Banks need to find new ways to detect attacks, increase the accuracy of these tools to reduce false positives, and improve productivity.
The two big issues for banks are fraud in payments and anti-money laundering.
Generative artificial intelligence (GenAI) will have a role to play, although it is still early days, says Pete Redshaw, vice-president analyst at Gartner.
When it comes to fraud, banks, vendors and even fraudsters have begun to augment their systems with GenAI to help them identify fraud.
Banks could use GenAI to add data to help predict fraud attacks, and to improve their AML reporting.
Improving the productivity of the people already working in fraud or AML will make a big difference to banks and outweigh the cost of adding GenAI tools, Redshaw says.
Banks’ IT departments face a number of big challenges that need to be addressed, Redshaw explains.
The first is taking a holistic approach “At the moment we have a plethora of siloed solutions for payments fraud and AML, from many different vendors. We have cobbled them together with APIS but they were not designed to work together.”
Criminals use the gaps in integration to launch their attacks, so banks are looking for properly integrated systems to come from a single supplier. The banks’ own teams also need to be fused, with teams on fraud, cybersecurity and AML all talking to one another.
As a result, many vendors are now selling combined fraud and AML systems.
AI and GenAI are being used by cybercriminals to improve attacks; and now banks are using technologies like machine learning to combat AML.
AI and machine learning can help banks get ahead of the curve. Examples include the use of technology to create alerts about phishing and vulnerable customers; continuous KYC and CDD; presence and activation of money mule accounts; LTM moves for predicting the next customer transaction; green flagging; and capturing payment information earlier in the lifecycle.
Cloud computing is a big trend, and this is growing very quickly – indeed 80% of new investments are in cloud. This move is not so much for cost considerations, but performance, compliance and safety in numbers.
The talent crisis is real and there are simply not enough experienced people for banks to employ.
Too much data is a thing, Redshaw adds. Many tools are great at ingesting data but are not as helpful with exporting to enterprise dashboard or enterprise data warehouses.
No bank is an island, he stresses. For instance, there are some things banks cannot do alone, including payee confirmation, payer confirmation, vendor ecosystems, and fraud and AML reporting exchanges.
Synergies with regtech are important, and technology has a big role to play in automating what banks need to do.