GLOBAL REGULATION: New Independent Research Study Reveals Majority of Global Financial Institutions Are Unable to Respond Effectively to Fraud and Financial Crime.

As published on ffnews.com, Thursday 1 June, 2023.

BioCatch, the pioneer of behavioral biometric intelligence and a leader in digital fraud detection, today announced the findings of a new commissioned study conducted by Forrester Consulting on behalf of BioCatch: “Improve Fraud and Anti-Money Laundering Operations With A Proactive And Unified Approach.” The research reveals the reality about the concern and readiness of the world’s largest banks’ ability to effectively respond to the changing fraud and financial crime landscape. This research comes on the heels of increasing media and regulatory body reports that money laundering scams are increasing at alarming rates.

Compiling responses from more than 150 financial institutions across Europe, North, and Latin America, the study highlights the challenge to effectively detect fraud and money laundering campaigns before customers’ financial assets are adversely affected and lost. The challenge to detect customer exposure creates significant financial, regulatory, and reputational risks. In parallel, the research shows that banks are also struggling to meet consumer demand for digital journeys that are simple, safe, and secure.

The Improve Fraud and Anti-Money Laundering Operations With A Proactive And Unified Approach study reveals additional operational concerns and challenges of shifting to a digital-first banking business model while keeping their customers protected from fraud and financial crime. Findings of the report include:

78% of global financial institutions report they are concerned about their ability to respond to emerging fraud threats quickly and effectively.
8 out of 10 financial institutions struggle to provide digital experiences that are both frictionless and secure.
83% of banking leaders say the market environment demands that they keep up with best-in-class approaches for responding to financial crime.
75% of financial institutions report that financial risk to the organization increases significantly with each additional day of investigation into cases of financial crime.
75% of financial institutions agree that integrating EFM and AML capabilities is critical to their ability to respond to financial crime quickly.
Only 8% of banking organizations have fully integrated people, processes, and tools across EFM and AML teams.

The Forrester survey further reveals that financial institutions are aware of the need to detect financial crime early and integrate Enterprise Fraud Management (EFM) and Anti-Money Laundering (AML) capabilities. However, only 8% of reporting banking organizations have managed to fully integrate people, processes, and tools across EFM and AML. Most survey decision-makers are implementing best practices like integrating explainable AI/machine learning (ML) risk-scoring models to ensure transparency in decision-making processes and to provide customers with a seamless experience and a safer digital journey.

The study finds that behavioral biometric intelligence can act as the critical link between EFM, AML, and cyber teams, empowering the teams to work together leveraging unique data that defends against the most complex types of fraud such as social engineering scams. It is key for fraud teams to foster collaboration among stakeholders, including banks, regulatory bodies, and law enforcement agencies. FIs should leverage collective expertise and resources to adopt innovative FRAML (fraud and AML) solutions that effectively combat financial crimes while providing a better digital banking experience for consumers.

“At a time when consumers are demanding better protections and integrated, frictionless digital experiences, financial institutions’ fraud teams are struggling to meet the challenge due in large part to antiqued technology and overwhelmed resources,” said Gadi Mazor, BioCatch CEO. “When I meet with banking leaders globally it is clear that collaboration is key. Financial institutions need to bring together teams internally, cooperate with other financial institutions, and partner with technology developers. As a fraud fighting community we have the opportunity, capability, and duty to fight fraud together.”

“Anti-money laundering has historically been a compliance activity,” stated Peter Tapling, Managing Director of PTap Advisory, a global payments advisory firm. “As reimbursement models threaten significant financial losses due to APP scam reimbursement policies, financial institutions must make a hard shift towards more integrated Fraud and AML practices.”

To learn how FIs are integrating their fraud management and AML operations to save time and money register for Improve Fraud and AML Operations with a Unified Approach webinar on June 6 with guest speaker Andras Cser, VP & Principal Analyst in Forrester’s Security and Risk Management practice.

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