According to a recent report by Britain’s Financial Conduct Authority, Banks and other financial institutions have turned down more than a million new customers and done away with 370,000 existing ones citing financial crime issues. The watchdog’s findings were drawn from its first yearly crime review that was based on surveys conducted relating to 2,100 regulated or financial firms up to December 2017. They properly displayed the magnitude of cybercrime in Britain’s largest economic sector.
Megan Butler, FCA’s executive director in charge of overseeing investment, wholesale and specialist companies, said that banks ought to arm themselves with advanced technology in the fight against crimes such as identity theft and phishing, which are currently the most popular fraud risks. Phishing entails fraudulent emails from an individual posing himself or herself as a bank or any other firm asking for people to reveal their credit card details or passwords.
In her speech, she emphasized the importance of technology in safeguarding institutions against financial crime, which has mostly shifted online. In fact, Megan went ahead to point out the statistic that 50% of all the crimes recorded in the United Kingdom are presently cybercrimes. Combating financial crime has emerged as the main priority for both the UK government and the FCA, especially now as they strive to protect the financial sector’s standing as Brexit approaches.
Since taking such drastic moves to curb financial crime, banks have elicited criticism, especially for denying companies and customers banking services without providing clear reasons. British banking institutions alone spend a whopping five billion pounds annually in an effort to fight financial crime, which is about a billion more than what the nation spends on prisons. Butler made these remarks during a conference about steps for countering money-laundering.
While speaking at FCA’s Cross-border Anti-Money Laundering TechSprint, Butler cautioned city firms from simply trying to address the problem through investing large sums of money. She reiterated her remarks by saying that there was no expectation on companies to spend funds in a bid to prove willingness to solve the problem. However, if they have innovations, technologies or methods that help them in combating crime, they ought to tell regulators. The ideal way to win this arms race, which seems to be heavily based on automation, is to turn technology against the criminals themselves.
For Butler, the next stage in the process of combating financial crime should be the application of intelligent technologies such as machine learning, natural language processing, robotics and artificial intelligence (AI). By doing so, firms will be in a better position to identify suspicious transactions in real time from transaction data and unstructured account. However, Butler said that this undertaking would not be easy, as numerous companies are utilizing legacy IT systems, some of which were created back in the 70s.
With banks recognizing their systems as the main problem, they have ended up spending a lot of money to upgrade systems in a bid to become extra digitally focused. For instance, JPMorgan spent over $9.5 billion on technology in 2016.