Industry Insights with Brian Ferro, BAE Systems Applied Intelligence

Anti-Money Laundering (AML) , Cloud Security , COVID-19

Banking on Uncertainty - The Future of Financial Crime and Compliance

Banking on Uncertainty - The Future of Financial Crime and Compliance

Even before the pandemic set us on the road to a global recession, many banks were struggling to balance the polarising pressures of a changing world and keeping to business as usual.

See Also: 5 Requirements for Modern DLP

There's newer and newer technology evolving financial crime and fraud typologies, which continues to plague global firms. They face a fight simply to keep pace with the increasingly sophisticated approaches that criminals are adopting.

Then there's the compliance tightrope - which is trickier to walk than ever. Banks are making decisions today that will attract a lot of scrutiny in the near future. They must ensure they have the rationale and data trail to back up what they are doing.

As if that wasn't enough, COVID-19 has meant that banks have had to turbocharge what had generally been a glacial stroll towards remote working. The chief concerns here are ensuring safe access to data and scaling for remote working for today and tomorrow.

With so much to tackle, it's hard for banks to prioritise when it comes to their compliance challenges. Below, I've explored the three key trends that banks need to confront to ready themselves for a future characterised by uncertainty and continually changing circumstances.

1. Evolving regulatory changes

Over the past decade, banks have had to comply with increasing regulations to guard against organised financial crime. Thomson Reuters reported that in 2019 alone, over 220 international regulatory changes occurred every day, amounting to 80,000 updates in that one year. Looking ahead, there's no sign of let-up in terms of regulatory pressure. As security is tightened and due diligence is improved, regulations will continue to appear and evolve.

The cloud can help organisations to meet their compliance obligations and become ready for an uncertain future. Cloud technology enables banks to handle expanding regulations in an elastic way, as well as providing the necessary long-term data storage. They can flex and scale their computing power according to demand, and only pay for what they use - meaning less waste and more control.

2. Gloomy economic forecasts

Cost efficiency matters more than ever as the economy enters what is predicted to be the worst recession in 100 years . Organisations across the financial services sector are under increased pressure to become leaner and more efficient. Paradoxically, the increase in regulatory requirements often means more staff and higher operational costs.

This is where cloud-based compliance solutions come in, offering scalable and affordable services to banks of all sizes - even rapidly growing start-ups. They allow organisations to move from a capital expenditure (CapEx) to an operating expenditure (OpEx) model. And cloud platforms free up time and resources to improve operations for those struggling to keep up with the page of change.

3. Combating changing cybercrime

The annual cost for UK banks combating cybercrime and online fraud is £6.7 billion, according to the Financial Conduct Authority . To be future ready, institutions must move faster than the criminals who seek to attack them.

Banks have to adapt rapidly to the shifting profile and pace of financial crime. As fraud is moving from transaction-based attacks to more identity-based attacks, banks must be diligent when making customers aware of the types of scams taking place. Fraud is becoming increasingly intelligent and intricate.

As well as focusing on external threats, banks also need to maintain due diligence and be alert to internal threats. They must be thorough when hiring new staff, conducting background and credit checks. They must educate employees on how to work safely and securely - particularly as remote working increases - so as not to expose the organisation.

Cloud-based solutions enable the bank of the future to detect fraud more accurately through advanced analytics. The system will perform due diligence and risk rate your customers, re-screening high-risk customers, monitoring transactions, reviewing suspicious activity, investigating cases and running reports. Vast amounts of data can be processed to inform decisions and deliver accurate results.

Cloud compliance compatibility

It's one thing finding a holistic hosted cloud compliance solution that can offer the same robust security standards (if not better than) that you'd expect from an on-premises solution. But you also need to feel confident that any cloud platform you embrace can help you reduce costs and ensure maintenance and management.

And that's why compliance in the cloud isn't simply a question of the platform. It's about people, process and partners, too.

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