Banking Circle Survey: 42% of Senior Bankers Say Outdated Tech Is Major Hurdle in Adopting AI to Improve AML Processes

Banking Circle, a financial infrastructure developer, notes that the rapid and widespread digital adoption by banking clients, and the accelerated digitalization across financial services following the COVID-19 outbreak have “expanded the opportunity for fraud.”

Criminals are increasingly exploiting “gaps” found between digital solutions or platforms, banking systems and customers, Banking Circle revealed. The company also mentioned that money laundering has grown rapidly as regulation and bank processes “fail to keep pace with the rise in criminal innovation.”

Banking Circle added:

“Anti-Money Laundering (AML) compliance breaches in the first six months of 2020 outstripped the total for 2019, with fines during that six-month period 40% higher than for the whole of 2019. While fines may be small relative to industry revenues, the damage caused to customer trust and business disruption are considerable, and opportunities to leverage operational efficiencies from automated compliance processes are overlooked.”

In a webinar hosted by Euromoney and Banking Circle, a panel of industry professionals talked about the future of AML and compliance in this new digital environment. The panel discussed various key issues such as the role of AML in the context of digital transformation. They also talked about the “essentials” that need to be a part of a company or business’ AML arsenal or strategy, and how compliance needs “more agility than ever.”

The Banking Circe team added:

“As with many areas of the financial services sector, legacy systems and outdated IT are cited as roadblocks when it comes to creating a modern AML arsenal. Indeed, Banking Circle’s soon to be launched research paper – which surveyed industry decision-makers from across Europe – found that 42% of senior bankers cited outdated legacy technologies as a major issue in embracing new advances such as AI in AML.”

Dave Burns, Chief Revenue Office at Napier AI, said that AI is “essential to the AML kitbag, but it is not the right place to start.” It’s fairly common to see companies or businesses jumping straight to AI-powered solutions before getting the basics right, Burns added.

He further noted:

“The right place to start is with a fortified and robust set of base capabilities, maximizing your use of available data, an optimized and sophisticated policy, and a focus on increasing efficiency within the organization to then create the headspace and platform to be able to go to the next step.”

Chris Caruana, VP of AML Solutions at Feedzai, emphasized the importance of “high-quality data” as a key part of that foundation.

Caruana remarked:

“A lot of that [data] probably exists already within your organization – it’s about unlocking that first, as well as having the right people and processes in place. You can ‘turn on’ AI tomorrow, but without the right structure it will fall down quickly.”

Livia Benisty, Global Head of Business AML at Banking Circle, pointed out that with AML an increasingly relevant compliance and regulatory requirement, there’s a lot of opportunity for banking institutions to approach it within the context of their digital transformation strategies.

Although there’s a lot of focus across the industry on digital or business transformation, this is quite applicable to commercial areas like product, which means AML can “slip down the priority list,” Livia added.

She continued:

“In financial services, if you’re not continually digitally transforming, you’re probably going to get left behind. The industry players whose infrastructures have been built to allow for constant change will be best placed to continually innovate and utilize the best technologies.”

(Note: for more insights from Banking Circle, check here.)

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