Limiting exposure from cyber threats and streamlining controls

Limiting exposure from cyber threats and streamlining controls

by Andrew Davies, VP, Global Market Strategy, Financial Crime Risk Management, Fiserv

Interview ahead of Fraud and Financial Crime USA Congress, taking place March 27-28 in New York City 
Can you please tell the Risk Insights readers a little bit about yourself, your experiences and what your current professional focus is?

I am vice president, global market strategy, Financial Crime Risk Management solutions at Fiserv. In this role, I work with Fiserv customers around the world to design and deploy effective risk management solutions to mitigate financial crime risks with particular focus on compliance, money laundering and fraud. I am also responsible for seeking new markets and applications for Fiserv’s financial crime detection and prevention solutions.

I joined Fiserv in 2007 and I have worked in the software industry for more than twenty five years supporting many of the world’s largest financial institutions, both private and public. My experience covers real-time payments, front-office trading, risk mitigation of financial crime risk, settlement risk, and more.

I focus on financial crime detection and prevention systems and am particularly interested in managing the risk associated with the faster movement of money around the world.

What, for you, are the benefits of attending a conference like the Fraud and Financial Crime USA Congress and what can attendees expect to learn from your session?

For me attending a conference like the Fraud and Financial Crime USA Congress affords me a great opportunity to meet peers from other organizations to share ideas and network. Such events also allow me to learn from the experience of the presenters and get access to great content. From my session I hope to provide information about current threats and practical steps to help with managing threats and how to manage risk more broadly. Also security is a key differentiator for strong institutions which goes way back to the origins of financial services.

Could you provide insights on limiting exposure from cyber threats and streamlining controls?

Speed is a key factor for the future of financial services, and with the right strategy financial institutions can balance the need for speed with the imperative for security. As the introduction of faster financial services accelerates, security will become a differentiator for financial institutions that deliver it well.

In your opinion, what are the potential avenues where intrusion can take place?

All digital channels are under attack and need to be secured. Also having an enterprise view across channels is required to get a holistic view of risk and to effective handle attacks.

How can customer experience be improved within fraud measures?

Effective fraud controls can be differentiators for financial services companies. However we need to accurately detect financial crime and to do so we need to leverage the right technology. If we do these things then we can enhance customer experience rather than degrade it.

How do you see the impact of Fraud and Financial Crime evolving over the next 6-12 months?

The accelerating rate of technological innovation is transforming every aspect of our lives. The pace of change in business and financial services today is different than it was 10, or even three years ago. People want everything to happen more quickly, whether it’s accessing their account balance, getting immediate access to their pay check or even purchasing a new product like a life insurance policy.

Recent quarterly consumer research from Fiserv only underscores the challenge for financial institutions. According to Expectations & Experiences: Consumer Payments, 50 per cent of consumers consider “real-time” in financial transactions to mean immediately.

People want immediacy to go hand-in-hand with security. This year, that continued expectation will further nudge financial institutions from a mindset of acknowledging the need for speed to introducing those faster financial services.

Along with greater speed comes new fronts in the fight against fraud. Here are three trends to watch as financial institutions balance speed and security.

1. Real-Time Fraud Detection

The introduction of new technologies such as the New Payments Platform (NPP) introduced in Australia early last year are enabling payments in real-time. Real-time offers a wealth of opportunities and conveniences to the industry and consumers, but there are inherent risks to any evolution in financial services.  As money moves more quickly, detecting and stopping fraudulent transactions takes on increased urgency.

With faster payments, the time from initiation to availability of money is seconds rather than minutes or hours. When all of the processing and network steps are considered, each must be completed within a second at most, including validation, accounting and fraud detection. This requires greater automation and can be facilitated by new ways of managing payments.

Payment-hub technology, for example, enables the management of all payment types on a single platform and promises better risk analysis, faster settlement, lower routing costs and a real-time view of transactions. The technology arose from European regulations, and gaining traction among financial institutions in other countries, many of which see value in the potential for greater efficiency and enhanced visibility.

2. Managing Third-Party Risk

Consumer-focused technology companies are resetting expectations for financial services.

To adapt, financial institutions are embracing technology at every step of the consumer experience, whether through in-branch teller kiosks, artificial intelligence-based consumer assistance or integration with third-party FinTechs.

Open banking regulations are making it a priority for financial institutions to integrate with FinTechs and other third-party companies with which consumers have relationships. Under the regulations, financial institutions must provide trusted third parties access to customer information when consumers allow it. Currently in Australia, open-banking regulations are set to come into force no later than February 2020, with financial institutions currently piloting the system.

Once again, technology presents many opportunities for consumers and financial institutions, but it also raises the stakes on security. If financial institutions begin engaging consumers more often through FinTechs, identification and validation will become even more crucial. A big question will be: What do you know about the security of the companies accessing information from your systems?

That question takes on multiple layers when considering the different channels and services FinTechs and other third-party companies represent. Financial institutions’ security strategies will need to account for payments, lending and card issuance, just to name a few.

Financial institutions can do this by adjusting their strategies in terms of due diligence, updating processes, and monitoring and evaluation. In the new interconnected financial services landscape, it’s not enough for a financial institution to ensure their own systems are secure, they also have to consider the security of the companies accessing information through their systems.

3. Controlling and Leveraging Data

Financial institutions’ success managing risk in the future will be largely dependent on how well they assess, leverage and control data.

Yet the sheer volume of information flowing through financial institutions poses what can appear to be an overwhelming challenge. How can organisations manage so much data? How can they ensure its accuracy? How can financial institutions make sure it’s useful?

Failure to answer those questions comprehensively can be costly. According to Gartner’s Data Quality Market survey, organisations believe poor quality data to be responsible for an average of $15 million per year in losses. Financial institutions don’t simply need to manage the volume of data. The pace of change within that data is staggering, and institutions have to manage that in the context of financial crime risk. The best defence, then, is making sure the data is accurate.

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