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​Keeping up with the Fintechs: Digital Banking & the Financial Crime Impacts

  • Publish Date: Posted 7 months ago
  • Author:by Sam Anderson

Why traditional FS institutions must keep up with fintechs to remain competitive in the market while reducing the risks of a cyber-breach

  • Over three quarters of global consumers prefer online banking services

  • 43% of UK businesses identified cyber security breaches in the past year

  • Cyber perils are the biggest concern for companies globally in 2022

Without doubt, fintechs and start-ups are currently blazing a trail when it comes to offering consumers a host of products and services which are efficient, intuitive and easy-to-use.

It is evident that people are increasingly embracing the trend for digital banking, as Publicis Sapient’s global survey found that 77% of consumers say they prefer to interact with their banks online rather than in-person.

With fintechs paving the way in delivering successful online and, in many cases, digital-only products, what can the more traditional financial services institutions do to keep up?

The benefits come with risks too

There are palpable benefits which stem from investing in digital transformation to provide what consumers want in a safe and secure way.

This includes enhanced ability to examine individual cases of cyber breaches, reinforce confidentiality, monitor software and devices and root out suspicious activity. Not to mention being privy to data-driven insights, which results in a better customer experience while increasing profit margins and overall productivity at the same time.

However, amplifying digital capabilities inevitably presents a variety of new and increased opportunities for potential threats from fraudsters and cyber criminals.

In fact, according to research by data consultancy Databasix, 43% of UK businesses identified cyber security breaches in the past year, with £16,000 being the average cost of a data breach for SMEs in the UK and the financial services sector, in particular, is vulnerable to such attacks.

And it appears this problem isn’t going anywhere, as reports emerge that cyber perils are the biggest concern for companies globally in 2022, due to a surge in ransomware attacks. This is according to the Allianz Risk Barometer 2022, which is based on insights from 2,650 risk management experts across 89 countries and territories.

So, what are the Financial Crime & Fraud related threats posed by going, or not going, digital? Are their benefits to investing in digital transformation in certain business areas? Which job roles and skills should business leaders be looking out for to improve their anti-financial crime and fraud capabilities on the journey to delivering great online banking services?

Let’s find out…

Hire the right people

It is vital to invest in anti-financial crime and fraud manpower to help mitigate any new cyber risks posed by advancing technology. Prevention and detection are key defences against financial crime and industry professionals are trained to spot any red flags and tackle them before they create a larger problem, particularly one which could damage the profitability and reputation of the organisation in question.

Who to hire: Fraud Analyst, Financial Crime Prevention Officer

Understand the power of data

Data is always king when it comes to successful fraud management. Augmenting online and digital capabilities will vastly increase a company’s potential to harness a huge assortment of data about their customers, products and more. But with a larger amount and variety of data comes further responsibility to store, manage and use it both valuably and within regulations.

Skills to look for: data sourcing and modeling, data storage, analytical capability, coding abilities with software such as SAS, Python and R

Protect your digital footprint

The move to digital networks may well result in the need for less physical branches but that doesn't mean that organisations should let their guard down. The highest levels of identification and authentication are critical when it comes to protecting confidential or sensitive online or cloud-based data and this is where your business can benefit from application fraud specialists, alongside authentication experts.

Who to hire: Application Fraud Specialist, Authentication Strategy Manager

Meet customer expectations

In the digital world, expectations are high, with customers expecting smooth user journeys and decisions being made in mere milliseconds. Digital fraud strategy managers facilitate this with their ability to define different customer segments, create and develop bespoke treatment strategies for a more seamless customer experience and devise risk scorecards which are reflective of product constraints.

Skills to look for: customer segmentation, strategy development, scorecard development

React to the shift in counter fraud solutions

Moving forwards, counter fraud solutions will be modular and no longer rely on pre-defined point solutions. Those SMEs which possess the skills to recognise fraud and have the knowledge of real life use cases to help build bespoke solutions will be key. Fraud skilled software engineers can help to develop understanding and apply tangible solutions in this area.

Who to hire: Specialist Fraud Backend Engineer or Software Engineer

Monitor crypto transfers

The most notable cryptocurrency hacks involve decentralised finance and can equate to up to billions of pounds worth of lost investments. This is why it’s important to have expert knowledge of cryptocurrency within your business in order to monitor the crypto network and protect from the risk of cybercrime.

Skills to look for: Cryptocurrency, Blockchain, ability to stay up-to-date with technological and market developments

Use a virtual agent

Automated solutions, such as next generation diallers used to resolve fraud detection cases, are available to replace the typical manual call centre agents. If a business decides to advance their digital anti-fraud capabilities by employing these tools, their application requires a specialist who can define and streamline strategies and configure efficient systems by harnessing the power of AI.

Who to hire: Project Manager, Automated Systems Specialist, Transformation Leader

What to take away?

What’s clear is that, with the right skills and people on board, any organisation can successfully advance their digital footprint and effectively compete with the start-ups and fintechs of today’s market.

With the persistent upsurge of digitalisation in the financial services arena, the industry professionals and specialist skillsets which will allow companies to expand their digital offering and keep them competitive in their market are in high demand.

Hiring managers looking to engage with these invaluable individuals will need support from Financial Crime & Fraud recruitment experts in order to effectively target and appeal to them.

Our Financial Crime & Fraud team has a combined 30 years’ experience in pairing skilled industry professionals with a range of businesses, from global banking groups to specialist lenders and more.

Find out more about how they can support your hiring needs here, or drop us a line and one of our specialists will give you a call to discuss our offering in more detail.

A big thank you to Ian Anderson, Senior Director and Fraud industry expert, for his significant contribution to this article. If you would like to collaborate with MERJE to share your industry expertise, get in touch with our marketing team: marketing@merje.com