Has your bank account ever been hacked or have you ever been a victim of banking fraud?
Do you ever wonder what mechanisms financial institutions have in place to curb fraud and money laundering?
These are some of the fascinating topics that were under discussion at FICO Forum Africa, the fourth in an annual installation of conferences organized by world-leading predictive analytics company FICO. The event, which took place at the Mount Nelson Hotel in Cape Town, brought local and international data scientists, risk managers, compliance officers and more together under one roof to explore how AI and machine learning can power up organizations’ ability to manage data in ways that improve the customer experience.
Day One of the conference focused on topics such as analytics-based services for digital transformation, fintech disruption within a bank and the convergence of fraud and financial crime compliance.
The talk on fraud and financial crimes focused on the use of robotics and advanced machine learning in combating financial crimes within a stringent regulatory framework.
“Since 2011, there has been a robust discussion about the need for convergence in managing fraud while adhering to the regulatory environment within which financial institutions operate,” said Gabriel Hopkins, vice president of product development at FICO. “The reason why this has been a difficult goal to attain is that fraud and regulatory compliance functions are separate within institutions, and use separate technology platforms. This is now starting to change.
We are finally in a position to enable banks and financial institutions to have more flexibility in detecting and managing fraud and money laundering. With the advancement in the way in which consumers do their banking, there has been a spike in new fraud attacks that reflect the changing payments landscape and the continuing shift to digital, mobile and the introduction of new players such as Thyme Bank and Discovery Bank.
For example, there has been a significant shift in card fraud following the introduction of chip and PIN towards card not present or ID theft and first-party application fraud. Fraudsters are also using AI to mount ever-more sophisticated attacks.
This has led both fraud and financial crime teams to seek a more holistic financial crime approach, as well as increasing use of AI techniques alongside requirements for greater explainability.
“Across both fraud and anti-money laundering, there’s a need to understand financial relationships between payers and payees, but it’s a rather limited view of risk,” Hopkins said.
As you roll in additional behavior elements, you can start to gain a more clear perspective across channels and devices.
This necessitates systems that can track customer transactions in real-time, ingest the data, provide real-time payment alerts and provide suspicious activity reports.”