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New research shows 43 per cent of financial services organisations expect the cost-of-living crisis to increase the risk of financial crime and fraud over the next 12 months, as scammers target vulnerable consumers struggling with rising bills.

The research by global data and analytics company, LexisNexis Risk Solutions highlighted a concern that criminals are outpacing efforts to protect banks and their customers. A third (30 per cent) of financial services organisations believe anti-fraud and financial crime systems aren’t developing fast enough to keep up with criminal techniques, whilst a similar number (32 per cent) think fraudsters are spending more time targeting victims.

To address the rising levels of risk, seven out of 10 (69 per cent) finance organisations say they will invest more in technology over the next 12 months, with six in 10 (59 per cent) prioritising the emerging concept of financial crime and fraud risk orchestration.

Eddie Vaughan, banking expert with the LexisNexis RiskNarrative orchestration platform, explains: “Banks and fintechs are evolving from risk management to risk orchestration as they strive to better connect the systems and data sources used to combat fraudulent and criminal activities.

“Orchestration provides an end-to-end solution for customer onboarding and ongoing monitoring, incorporating anti-money laundering screening, transaction monitoring and case management, all within a single platform. It overcomes silos and manual processes to deliver more informed insights that enable quicker and increasingly accurate assessments of risk.”

The study reveals that, on average, financial services providers rely on five external vendors for data sources or solutions to prevent fraud and financial crime across their customer onboarding and lifecycle – with half of firms (49 per cent) highlighting that having multiple solutions in place helps to increase protection.

Vaughan continues: “Our research indicates that the majority of firms are looking to increase the level of technology supporting their financial crime and fraud workflows in the coming year. Scaling up offers many advantages but also brings with it challenges.

“44 per cent of finance organisations acknowledged that they need to better manage the levels of the protection they have in place, but a third also admitted that managing multiple systems and vendors can be complex and time consuming. Orchestration can help by giving businesses the flexibility and choice to deploy as many vendors and data sources as needed in their screening and monitoring, without the usual logistical headaches.”

The majority of respondents (74 per cent) surveyed were already aware of risk orchestration platforms, identifying the main benefits as being: the ability to automatically track customer transactional behaviour over time and flag anomalies (48 per cent); being able to bring all customer checks into a single, unified, digital platform (46 per cent); and creating risk-based financial crime and fraud screening bespoke to varying risk appetites (41 per cent).

Vaughan concluded: “Banks and fintechs want to optimise financial crime and fraud prevention efforts, whilst minimising any unwanted side effects, such as negative customer experience and complex vendor management.

“Synchronising and unifying existing systems into one, end-to-end solution that offers flexibility to adapt as you scale is a very cost-effective approach. It enables banks and fintechs to strike the balance between positive customer experience and more robust fraud prevention.”

  • Francis Bignell

    Francis is a journalist with a BA in Classical Civilization, he has a specialist interest in North and South America.

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