A multi-tiered approach to financial betterment
Financial betterment isn't just about helping individual customers. It's also about taking actions that improve society overall, like funding female founders to support gender equity and avoiding investments in the fossil-fuel industry to promote sustainability. Goldman Sachs did the former by investing in the Female Founders Fund, which puts money into technology companies started by women—a crucial mission when, as of September 2021, only 2.2% of all venture capitalist funding this year has gone to women-led teams. Meanwhile, Citigroup chose policy over profits when it imposed restrictions on firearm sales for its gun-selling clients in 2018 following the school shooting in Parkland, Florida.
Banks also help at the societal level by working harder to stop financial crimes. “Attack methods, technology, and skillsets have evolved over the years on both sides of the fraud equation," Eide says. “From theft of login credentials at scale, to vishing, phishing, and malware attacks, the ways in which fraudsters are operating has become increasingly sophisticated."
To combat fraud, she explains, American Express takes a multitiered approach, which includes educating customers on how to stay safe and proactively notifying merchant partners about possible bad actors. Machine learning aids in this effort through models that can identify and analyze emerging threats at various weak points, like online checkouts, where more and more fraud is taking place. “In 2020 alone, our machine-learning algorithms conducted real-time monitoring of more than 112 million credit cards in more than 100 countries. Our relentless focus on eliminating fraud has helped the company maintain the lowest U.S. fraud rates among the major networks," Eide says.
Genpact uses its proprietary, cloud-native, financial-crime software, called riskCanvas™, to help its clients weed out fraud. For example, as part of the U.S. Coronavirus Aid, Relief, and Economic Security (CARES) Act, Primis Bank used riskCanvas™ to analyze and mitigate the risk of about 2,500 paycheck-protection loans in just two months—around 40% more loans than it would have been able to issue otherwise. “This was a life-or-death situation for many small businesses," says Dennis Zember, CEO of Primis. “It didn't seem right to turn them away." The project uncovered a loan fraud rate of 3%, which was about 2.5% higher than non-payment protection program (PPP) loans. “We were able to identify fraudsters who were trying to get PPP money they shouldn't have access to and get loans into the hands of the small businesses that legitimately needed it to stay afloat," Osborne says.
With all the data and advanced technologies at their disposal, banks are becoming more than repositories of cash for their customers—they're also becoming trusted financial advisors, activists, and protectors. “It's clear that banks are in a position to enable financial betterment, not just at the individual level," Osborne says, “[but] at the community level and the global level, as well."
This article was first published in Fast Company.