One platform to rule them all

Is a single Financial Crime Risk Management platform really the answer?

Bringing disparate data models and departmental needs into one solution is the desire of most financial services organisations. But how big a difference can it really make?

Customers and investors are increasingly becoming aware of those organisations that repeatedly fall foul of financial crime, cyber breach or legal disputes with regulators, and the outlook is not good. 

Enough is enough

Such is the scale of the problem that regulators, like the Financial Conduct Authority (FCA), want change.

  • Slow manual processes and siloed datasets are no longer acceptable.
  • Intelligence needs to be easily shared cross-organisation.
  • Post-event remediation activities must recover more funds and cost less.

Financial services organisations are constantly under threat from ever more sophisticated fraud typologies including employee attacks and anti money laundering tactics. These combined with an accelerated move to digital-first mean that financial services organisations are starting to recognise that centralised FCRM platforms are critical for their survival.

Avoiding the pitfalls of siloed working

An enterprise-wide approach to FCRM that offers a single customer view of risk can also help:

  • enable streamlining of processes,
  • reduce costs,
  • automate routine tasks,
  • reduce regulatory risk.

However, the deployment of an enterprise wide FCRM platform is something that has eluded many financial services companies to date.

It is not uncommon to have a multitude of different systems across departments, up to 30 in certain large banks, with numerous product lines that have completely different data models, and procedures. Operating in this way makes it difficult to share intelligence effectively, leading to task duplication, and increasing the risk of being defrauded.

Yet a single customer view is still aspirational

During a webinar hosted by UK Finance, members were asked about establishing a ‘single customer view’ of financial risk when attempting to create a centralised FCRM.

The majority of registrants, 71.2%, stated that they had not been successful in establishing an SCV but thought that the concept would be hugely beneficial to their organisation.

If it was that simple, we'd all be doing it...

Many organisations point to the hidden costs of aligning their FCRM solutions across the organisation. Including:

  • No Board level ownership,
  • Low level investment, 
  • Poor quality data,
  • Lack of common standards,
  • Missing relevant expertise. 

Whilst these issues need careful consideration, the  cost of not acting can be significant. UK Finance estimated that failing approaches to FCRM resulted in UK banks suffering over £500 Million losses to fraud in 2018 alone.  Fines for breaches in AML regulations including; Deutsche Bank, BNP Paribas and Standard Chartered, all averaged around £500 Million to £1 Billion pound mark.

The true benefits are far-reaching

Investing in the deployment of an organisation-wide FCRM solution helps create much more effective controls across an organisation. These allow it to better withstand the full range of fraud, financial crime and compliance requirements needed in today's world. Benefits include:

  • Increased speed of customer boarding,
  • Reduced cost of fraud / AML detection and prevention,
  • Less reliance on repetitive manual processes,
  • Reduction in remediation activities,
  • Competent management of regulatory controls,
  • Speed of bringing new products to market.

Time for a new approach

One of the factors that has held many organisations back is the desire to marry old legacy systems with new, more agile, platforms. These projects have often stalled due to the inability of old systems to supply the speed, accuracy, and agility to process and analyse the volume of online transactions required.

Cloud-based FCRM platforms, accessible across an organisation are now seen as the way forward. They provide an enterprise level view of risk across multiple geographies and product lines all within a single risk management framework. They can be scaled at ease to reflect organisational change all without the expense of costly on-premise hardware and specialist in-house resource.

Better networked in every sense

The power of networks has to be one of the greatest advances in organisation effectiveness since the Internet enabled much wider and faster sharing of data.

Platforms that allow organisations to access wider networks means better leveraging of sector-wide insight, as well as intelligence from other verticals. This information can exponentially improve the ability to detect, predict and act on threats to an organisation. The fight against financial crime is not a battle that can be won by one organisation or sector alone.

"An organisation that exploits networked intelligence, such as consortium data or shared government intelligence sources, can better create a defensive posture that will deter the most ardent of financial criminals.”

The cost of doing nothing

Research by McKinsey and Thomson Reuters, in their 2018 compliance reports, suggests that as much as 0.4% of revenue is spent on financial crime prevention and compliance work. In a mid to large sized financial institution this could be as much a £1Billion a year.

Allied to this cost is the increasing burden of retaining large numbers of staff to operate costly manual detection and remediation processes, and to navigate and manage the frequently changing regulatory landscape.

Average fines for regulatory breaches are reaching into the billions for mid to large sized banks as regulators get tougher in areas such as AML. 

Time for change

Whilst many organisations are nervous at the thought of embarking on a project of this nature with such far reaching organisational impacts, doing nothing is simply not an option.

A single customer view of risk across the whole enterprise - including multiple product lines and territories is critical to providing a world-class customer experience. Having one platform in place can help protect against financial crime and fraud, and support maintaining regulatory compliance.

Those organisations that create a unified FCRM platform will be the ones to prosper. Others will fall by the wayside, embroiled in the complexities of identifying financial crime, meeting regulatory requirements, managing manual processes and running costly remediation exercises.

Suddenly 0.4% of revenue seems like an awful lot of money that could be better invested elsewhere...

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