Reduce financial crime more effectively with entity-centric monitoring
Companies will increasingly focus on efficiency and cost reduction. Not surprisingly, then, the roughly $274 billion spent globally on financial crime compliance per year will be a key target for cost-cutting. So, we expect to see a seismic shift in the sector's focus from event-driven to entity-centric monitoring, which is best served by advanced digital technologies.
With event-driven monitoring, a customer's legitimate transaction (the 'event') is often flagged as suspicious, resulting in a 'false positive'. By some estimates, around 95% of system-generated alerts are false positives. However, banks will turn to artificial intelligence to replicate the complex reviews of these false positive alerts that humans had previously performed. This will result in the same regulatorily defensible case files produced at greater speed and reduced cost while freeing up analysts and human investigators to do more value-added work.
An entity-centric approach means presenting data from the perspective of entities and their relationships, rather than individual events. So, it also looks at many more factors than previous methods. This type of contextual assessment results in better detection, investigations, and outcomes. Contextual understanding boils down to having the correct data and intelligence. So, the large-scale use of cloud computing will be essential for this approach.
Stay tuned for our next two predictions in this series.