Featurespace knows that with the right data and insights, you can make the world a safer place to transact. But for financial institutions (FIs) in the U.S., there has been no way to know how the industry is doing in the fight against crime, and no way to benchmark their success against their peers. Until now…
Featurespace recently partnered with PYMNTS.com to create that benchmark by interviewing two hundred executives in fraud and financial crime across America about their challenges, priorities, and innovation plans. We used the FraudClassifier Model from The Federal Reserve to structure the self-reporting from the industry’s fraud fighters into which typologies are causing the biggest headaches for their teams. From the insights of your peers, it is clear that the industry has a massive challenge on its hands but alongside this emerged five key investment and innovation priorities.
Fraud and Financial Crime as a Service
The industry has seen Payments as a Service, Banking as a Service, and pretty much everything else as a service: and now it is time for smaller FIs to partner with the industry’s best service providers to improve their fraud and financial crime prevention rates and deliver cost efficiencies.
Scams are big news everywhere, causing concerns for FIs, regulators, consumers, and governments alike. But there is a misconception that scams are an emerging threat in the U.S. The results of our research show that scams now represent two of the top five fraud volumes and losses in America.
Whether you call it FRAML (Fraud and Anti Money Laundering (AML)) or a holistic risk hub, our research shows that fraud and AML professionals have more in common than ever, including the need to collaborate on strategies, data science, and technology platforms.
Current technology complexities might be seen as an inhibitor by many FIs, but the reality is that waiting to modernize is not an option when it comes to reducing your organization’s market share of fraud and financial crime. Even fast followers experience significantly higher fraud losses than those that are brave and innovative enough to be first movers.
Regulators policy aims around fraud prevention, and AML and Counter Terrorist Financing are clear: they are focused on protecting consumers, citizens, businesses, and the economy. But when it comes to enabling those policy aims in their systems FIs are struggling for a variety of reasons. Complexity, lack of clarity, and the risk of non-compliance are all causing innovation inertia amongst FIs when it comes to responding to regulation.
How can FIs respond to The State of Fraud and Financial Crime?
A complete and accurate picture of fraud and financial crime trends is step one in devising strategies to improve performance and manage the total cost of fraud. Step two is learning from the first movers: there are FIs in the U.S. and around the world who are getting out ahead of the rising tide of fraud and financial crime through a combination of technologies, strategies, processes, and partners.
You can learn more about these innovators and how to mirror their success in The State of Fraud and Financial Crime in the U.S. 2022.