Banks struggled with pandemic fraud and money laundering surge

A new report from analytics company FICO has revealed that working from home over the pandemic has negatively impacted fraud protection, with 79% of banking executives saying there was a high or major impact.

A further 49% of respondents said it was a major challenge having multiple systems for managing fraud and financial crime

Toby Carlin, Senior Director for Fraud consulting at FICO said “Just as the pandemic put huge stresses on the health care system, it put huge stresses on fraud and financial crime management teams,” “Teams that collaborate in person and work with large software systems that have restricted access found that working from home hurt their productivity. This was compounded as the volume of fraud attacks rose.”

The impact of having multiple software systems for fraud management and financial crime compliance was also cited by UK respondents. This was the top technology challenge for 21% of UK respondents, which puts it at the top of the challenges. Almost half  49%  of respondents ranked it first, second or third among their technology challenges, the most of any challenge.

Carlin continued “Banks are feeling the pain of having fragmented software for managing fraud and financial crime. Even though some 80% of the functions between fraud prevention software and AML software are the same, the systems are nearly always separate, and the teams are usually separate too. In our survey, 64 % of UK respondents said these teams don’t even report to the same person at the bank. The latest systems, such as our FICO Falcon X, provide these technologies in a single platform, which can catalyze an integrated approach at a bank.”

The FICO study consisted of 110 interviews by OMDIA with senior executives driving, managing, or directly supporting financial crime, in the US, UK, Brazil, Germany, the Nordics and Canada. The survey included senior executives responsible for fraud management, financial crime compliance and security/technology. Respondents were roughly equal from medium-sized banks and large banks.