New Year’s Resolutions for Banks to Stop Financial Crime

Here are some New Year’s resolutions for banks designed to improve their operations and reduce fraud losses.

Tap Customer Data to Drive Revenue

Data is powerful knowledge. Using customer data insights to offer the right financial products to the right customer at the right time should be one of the top New Year’s resolutions for banks to focus on. 

Delivering convenience from the moment a customer opens an account is an important step in this direction. For example, banks can learn their customers’ key interests and the kind of bank products they use – like credit cards, home loans, or auto loans. With this knowledge, banks can offer customers related products like home or auto loans based on their interests. Banks can also use data to build loyalty by demonstrating how well they know their customers. This can include showing details of transactions, notes, and personalized saving goals in their mobile app or on monthly statements.

An engaging mobile interface is a key way to collect valuable customer data and further delight customers. Giving customers a seamless mobile banking interface will increase their retention and satisfaction with their bank. Banks will enjoy even more data (e.g., location, device, network, and behavioral biometrics) to improve buying experiences as well as fraud detection capabilities. This includes the ability to implement 3DS 2.0.

Understand Your FI’s Internal KPIs Better

Organizations need to take a close look at their internal key performance indicators (KPIs). Banks should closely examine how their system behaves, its projected fraud losses, and how their teams perform. These KPIs are often overlooked. Taking a closer look at these factors helps banks understand where to focus their efforts and resources in 2023. For example, understanding where fraud originates (e.g., by region or client segment) helps develop preventative measures and reduces future losses.

Educate Customers on Scams

Protecting customers from scams should also be among the key New Year’s resolutions for banks to address.

Scams soared in 2022 and dominated headlines in both the UK and the US. Scams are a problem that aren’t going away. Financial institutions need to fight scams 24 hours a day, 365 days a year. What’s more, we expect scams will only going become more sophisticated. And with the ability to instantly send money via faster payment services like WhatsApp or Zelle, fraudsters can get the money in seconds. Once the funds are sent, there’s no way to get them back. 

That’s why education has to be a cornerstone for banks to protect their customers and themselves from fraud. Banks must understand how different types of scams work and pass this knowledge on to their customers. Run through how to spot red flags, such as if someone calls claiming to be a bank official and asks for information like a password or card number. Remind customers that banks will never ask for this type of information and teach them how to identify common scams.

Embrace Automation Starting with Onboarding

Today’s customers appreciate the value of convenience. Opening a bank account from the comfort of your home sounds more appealing than visiting a bank branch and waiting in line to open an account. And it should also sound more appealing to banks. After all, a simpler, faster, and more secure account opening process accelerates a customer’s time to value. The faster they onboard, the faster they will transact. And the faster banks will be able to generate revenue opportunities and collect data to deliver the services and products their customers will need.

Automation enables smoother customer onboarding. Banks need to invest in the right perpetual Know Your Customer and Customer Due Diligence (pKYC/CDD) solutions to ensure they only onboard and keep trustworthy customers. Implementing the right pKYC/CDD checks can automatically review multiple databases to assess a customer’s risk level and quickly enroll the right customers. Most importantly, pKYC solutions alert banks when a customer’s risk increases based on significant events. Banks don’t have to wait until scheduled review times to learn how a customer’s profile has changed. 

Reduce False Positives by Giving Employees the Right Tools to Do Their Jobs

I can guarantee your analysts are overwhelmed by false positives and negatives. Resolve to increase employee morale in 2023 by helping them focus on the right alerts. Automation is the only real way we have to do this today. Giving bank personnel access to automated solutions enables them to reduce the volume of manual tasks in their workload, such as SAR filing and fraud alerts. Automated technology enables bank staff to make faster, smarter decisions and clear their workloads faster. With less time spent reviewing alerts, staff can focus on new ways to improve their organization’s revenues instead. This is ultimately what many team members would rather be doing than responding to manual tasks.

Embrace Machine Learning to Support Legacy Rules Systems

It’s time for banks to stop relying solely on rules-based legacy systems. While it’s understandable that changes are intimidating – especially technological ones – banks that don’t shift away from rules-based legacy systems will risk getting left behind in their fraud prevention efforts. Too many rules can become highly complicated to maintain, especially if a staff member who created a rule leaves the organization. 

Fortunately, banks don’t have to abandon a rule-based approach entirely. Instead, they can supplement their rules with machine learning technology. With machine learning solutions in place, banks can quickly see emerging fraud and financial crime patterns and respond to them faster. 

Implement Responsible AI to Remove Biased Risk Decisions

Artificial intelligence and machine learning are game-changing technologies for financial services. However, AI is developed and maintained by human beings, and as such, it’s vulnerable to biases. As banks invest in AI and machine learning, they must also ensure they are treating their customers fairly. Financial institutions should have safeguards in place to ensure they treat their customers as individuals, not cohorts. If biased patterns in AI and machine learning go unchecked, this could lead to some groups of customers being treated more unfairly compared to others. This could result in a serious public relations scandal. As banks add AI and machine learning to their systems, they should also invest in Responsible AI to ensure their customers are treated fairly. 

It’s Time to Migrate to the Cloud

Banks who haven’t done so already should consider making 2023 the year they migrate from on-premise to cloud-based environments. Shifting to the cloud relieves financial institutions of having to maintain or manage clunky on-prem hardware. It also provides faster software updates and access to data. Banks that shift to cloud environments stand to realize a much faster ROI and can enjoy an easier learning experience than on-prem. They also scale with greater agility and quickly adopt new technologies.

A new year brings new opportunities. Banks that fully commit to these New Year’s resolutions and do not let them fall by the wayside…like “forgetting” to go to the gym after two months, will outperform the competition!