Combating Financial Crime 2050 – Part 2

Continuing my musings about financial crime, the score is pretty even between the good and bad fellas. The recent prominent breaches through WannaCry, Gmail, University of Oklahoma and many more, cybersecurity breaches have already reported a 40% increase. Banking and financial institutions have been the worst hit, with a reported loss of INR 3200 crore in India alone. With this emerging threat perception banks and FI’s are deploying heavy duty arsenal to safeguard their interests.

With 6 billion Smartphones by 2020, the customer preference for mobility would completely digitize financial operations. The anytime-anywhere connected banks delivering personalized services would be the future. Millennials are already moving to FinTech companies that deliver instant, smart and immediate gratification. In this grand scheme of democratization security is considered paramount – and the future belongs to Big Data Analytics. Effective data management and analytics are already providing banks big ammunition to combat financial crime.

The massive data mining enables banks to get a 360 view of transactions and customers. In many case the transactions that look legitimate can be suspicious when viewed holistically. New technologies where networks themselves act as enforcers and preservers along with forensic data analysis and predictive analytics will amp up the security quotient.

The future banks will be a giant spider network where analytics and intelligent machines crunch million data points to check for suspicious activity. Payments masquerading as innocent bank transfers, retail payments and many others will be holistically reviewed within multiple channels to flag anomalous actions.

Artificial intelligence and Machine Learning will be the future of financial crime fighting. Today the technology is in its infancy and complicated analytics are not eliminating the torrents of false positives. With Machine Learning it will be possible to detect and understand patterns across multiple systems and engender accurate decision making. AI will be the back bone of future banks facilitating high-end investigations or KYC for onboarding.

Linear, neural networks and deep intelligence are the future of risk management in financial institutions. Statistical risk models combined with machine learning algorithms can comb through data in milli-seconds to report suspicious activity. Artificial intelligence in banks can be used tandemly to assist other agencies like law enforcement to catch criminals. Terrorism, human trafficking, drug or smuggling subsist on the bedrock of illegal financing. With AI technologies, banks and other agencies can integrate their resources and choke criminal funding activity.

2050 seems to be a long way down the line but the march towards data led intelligent financial crime detection has already started. The emerging threat perceptions are encouraging Financial institutions to abandon their fragmented approach of managing financial crime and compliance. With IoT and mobile becoming the vehicle for banking transactions, it is imperative that banks develop comprehensive financial crime detection systems in their security armoury. Stringent transaction monitoring aided by AI, Forensics and Analytics is the only way to outwit the smart criminals.