Trends such as Fraud Detection, Anti-Money Laundering, and KYC (Know Your Customer) emerge as the 3 most up-to-date trends affecting every Western European bank and their processes. Banks are presented with a tough choice: risk failing or commit to tech innovation. The time has come for them to reconsider their traditional approaches and challenge their long-established beliefs.
We took a chance to speak with HTEC’s Freek Roelofs, Head of BFSI for the Benelux Region, about these trends impact the financial services and how they can best leverage emerging technologies to accelerate innovation.
One unavoidable measure of the booming success of payment service providers (PSPs) is the increased risk of financial crime. Unmanaged, this risk can pose an existential threat to PSPs.
Freek explains, “Fraud detection is the way to go for these organizations, and it is high on the PSPs’ list of priorities. Every consumer is using payment service providers nowadays, and some don’t even know they are using it — in the end there is always a banking institution behind them. Now, if you want to be a good, trustworthy payment service provider, you want to build trust with your end customers so that they would trust the label and the app they are using. Trust is the key to PSPs’ success. And to be trusted by their customers, financial services organizations must ensure that their apps work all the time seamlessly and are very secure. Therefore, fraud detection should be at the highest standard.”
The rapid growth of e-commerce and digitalization in financial institutions has also brough many downsides, opening more opportunities for payment fraudsters. Consequently, payment fraud is on the rise, and it is becoming more complex.
This means that human decision-making and old transaction alert systems are no longer fast and effective enough to detect fraud. Machine learning and AI play a critical role here as they enable banks to detect the changing tactics of fraudulent transactions. With a tremendous amount of payment transactions happening every day, the volume of banks’ payment transaction datasets increases much faster.
“There are many valuable hidden insights in this data, which can be used to detect fraud. Through human decision-making and machine learning algorithms and human-decision making algorithms that can learn from these datasets, payment fraud detection can be much more effective and efficient. The only way to proactively fight fraud or money laundering is with highly sophisticated technology solutions. HTEC serves as an innovation enabler for financial services by delivering advanced financial and banking solutions that use the latest technologies, functionalities, complex trend analysis, risk assessments, AI algorithms, Machine learning, and the latest transactional protocols with secure compliance standards” says Freek.
Anti-money laundering is still growing daily. There are predictions that the amount of financial crime industry will triple in the next 2 to 3 years. There is progression and the desire to innovate by focusing on high-risk–reducing activities. On top of this, firms also need to rapidly adapt to a changing environment and its impact on them, like the growing presence of digital assets.
According to Freek, “Lots of work to be done, lots of technical knowledge we need. There is definitely much progress and much still to accomplish. Some organizations are still relatively basic in their approaches, with many costs spent on low-risk–reducing activities. But there is an opportunity for banks to get out in front. ML is helping banks improve their AML (Anti Money Laundering) programs significantly, and US regulators strongly support these efforts. For instance, after the Anti-Money Laundering Act of 2020 and the subsequent National Illicit Finance Strategy, US agencies are encouraging banks to test and adopt innovative approaches for fighting financial crimes.”
By improving the quality of data collection and applying the right analytics during the know-your-customer (KYC) process, banks can tap deep customer intelligence and insights to improve risk management, the customer experience, and their own ability to service customers, lower costs, and boost revenue. This can help us learn more about their changing preferences and proactively meet their new needs.
“If companies unlocked the power of data with AI and machine learning in the right way, they could do three things. They could ensure compliance and show the world that they provide security and trust. They could personalize their customer experience at scale and design their products or services to perfectly match their customers’ needs. Finally, with all this data, they could achieve efficiency. This would further result in lower costs and better, more streamlined products. So, compliance, personalization, and efficiency, and all of this is based on the tremendous power of data.” — Freek Roelofs, Head of BFSI for the Benelux Region
From fraud risk assessment and management and providing the highest security standards to building end-to-end advanced banking solutions powered by the latest technologies like AI, Advanced Analytics, and ML, HTEC takes bold steps to enable financial services organizations to thrive and be future-ready. With our deep domain expertise and gathered knowledge, we help companies reimagine banking experiences for their end consumers allowing them to reignite growth and stay on top of the game in the rapidly changing world.
“Technology and innovation are the only way out. Now we have digital assets and digital money — a bank isn’t a bricks and mortar store anymore. Our bank is the app on our mobile device. Everything will go digital, and the only way to create a safe, trustworthy organization in a digital society is to protect it using state-of-the-art technologies, enabling anti-money laundering, KYC, fraud detection, and so on. HTEC is here to help as a strategic partner, to deliver on our promise of technology and human ingenuity”, explains Freek.