Considering the increased reliance on digital technology and the rising incidence of cybercrime, security is one of the biggest concerns for financial services institutions today.
According to the UK’s Office for National Statistics (ONS) there were over 2.5 million cyber crimes reported in the last year, being the most regular form of cyber crime, attaches by malware, which fall under the Computer Misuse Act, and hacking. Banks are one of the most common targets of cyber crime. As a matter of fact, it is estimated that roughly 900 Million Dollars were stolen from worldwide banks in last two years.
It is therefore essential for banks to devise and adopt strategies that can identify, prevent and control fraud and financial crimes in their routine operations and ensure cybersecurity.
Risk management solutions
One way to address the problems outlined previously is through risk management solutions. Risk management solutions have been available in the market for a long time, but looking for an efficient one has the ability to detect and prevent frauds, protect the brand and goodwill of a bank and improve staff productivity. In order to devise such a strategy, banks have to identify the primary objectives that the risk mitigation system needs to address. This can range from fraud management and cyber-security concerns to anti-money laundering.
Challenges that Risk Management Strategy must address
- Frauds and cyber crimes are increasing in both frequency and complexity. Adoption of right technology and tools is critical to prevent financial crimes of any kind.
- Data capture and use is getting increasingly heavy and complicated. Acquisitions and geographic expansions add to the complexity of data gathering. Banks need to access, retrieve, clean-up, collate, load, and manage, both internal and external sources of data, for analysis.
What an Efficient Risk Management Solution has to Offer
Banks can today protect themselves from known and unknown vulnerabilities, and can address such threats in a flexible and effective manner. A good fraud management system offers the following benefits.
- High detection rate of frauds prevents any loss of finances and reputation, while maximizing overall productivity.
- Protecting customers from fraud helps banks improve their efficiency, while ensuring regulatory compliance.
- A good system protects the bank’s market share and keeps both the brand and its customers secure.
- The system has the capability to monitor user behavior across branches and locations effectively.
- Case management tools can be reused and they also help to conduct and finish investigations efficiently.
- Threat-assessment helps identify current and potential risks or vulnerabilities.
- Anti-fraud measures can be established, while codes of conduct for staff, customers, and partners can also be drafted.
- A good fraud detection and fraud management system should be able to offer a comprehensive end-to-end suite of services and should deal with both technology and business requirements for a healthy ROI.
Risk management solutions in banks should not only address different types of fraud on a real-time basis, but must also be able to detect and proactively handle possible frauds. This requires trained and experienced professionals, streamlined data analytical abilities and specialized tools.
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