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Financial services firms advised to future proof themselves against a range of threats
Written By: Rosemary Gallagher – 2 min read
In a financial services business environment featuring regulatory change, the ever evolving and fluid nature of fraud – particularly online – and increasing cost pressures, it is vital that companies stay ahead of the curve on financial crime risks to protect themselves and their customers.
According to LexisNexis Risk Solutions, a global data and analytics company, financial services businesses of all sizes need to take steps to ‘future-proof’ themselves against a range of evolving threats and unpredictable market conditions. Chris Foye, market planning director at LexisNexis Risk Solutions, puts the importance of planning for the future into context. He explains that factors such as increasing pressure from regulators, as well rising levels of fraud and a tough geo-political landscape are all adding to the compliance burden for UK financial services firms. More entities, for example, are being added to sanctions lists, largely due to the conflict in Ukraine, which means that organisations need to take particular care to mitigate against the risk of a sanctions breach which can bring hefty fines and reputational damage. Meanwhile, the fraud landscape is ever changing.
“We have seen a significant rise in digital threats, particularly since the pandemic, and the cost of living crisis is also creating new opportunities for new and innovative scams,” Foye says. “Organisations are looking to future-proof. Change is inevitable and it’s not always easy to predict what’s coming. Companies therefore must have things in their technology stack that can accommodate change quickly, without being too disruptive to the business, and that help protect them from various compliance and fraud risks.”
Financial services companies are also having to differentiate themselves to win business. McKinsey research reveals that improving the customer experience can increase sales revenue by 2% to 7% and shareholder return by 7% to 10% – another reason to invest in future-proofing. According to Foye, a key part of this is to make the on-boarding process for new customers as smooth and compliant as possible because that is an important competitive differentiator.
Mike Harriss, chief revenue Officer for LexisNexis RiskNarrative, a risk orchestration platform, adds that having a tool that is highly configurable can allow businesses to be more nimble in targeting new markets making it less likely they will lose out to competition as well as providing the best possible customer experience.
Therefore, as well as external factors driving future-proofing, changes and ambitions within a business are another key element. To scale up, a company may be looking to launch new products, open new channels and enter new geographies and jurisdictions, and with each step the risk profile is altered. “Businesses need a platform that is highly configurable in order to accommodate changes in the risk profile and enable them to launch new products or go into new markets easily,” says Foye. "Technology and AI can help businesses significantly future–proof in numerous ways.”
Foye describes the RiskNarrative™ platform as highly-configurable with over 50 pre- integrated own-brand and 3 rd party service providers, which allows customers to respond to an ever changing financial crime landscape.
He says: “If you’re entering a new geography and you’re dealing with consumers you’re going to need to do identity verification. Having that rich ecosystem of 3 rd party app providers within RiskNarrative™ gives our customers choice and enables them to meet the requirements of particular geographies.
“For example, many organisations take a siloed approach and contract with different vendors to satisfy certain business requirements. With this model, in some cases they may need to deal with five or more different vendors. They will need to find them in the first place. Once they’ve found them, they need to go through the contractual process of signing them up. Then they have to integrate them and carry out testing to make sure everything works. There is a lot of time, cost and other overheads involved in this process. Our orchestration platform eases that burden and speeds up deployment times.”
In essence, LexisNexis Risk Solutions helps businesses avoid the typical siloed approach of having multiple vendors each with their own individual integrations, including all the overheads such an approach carries.
Another advantage of the platform which is ideal for future-proofing, says Foye, is its ‘no code strategy’ which allows financial crime experts to make any required changes directly without delays. He adds: “This reduces or eliminates the need to involve development resources to implement changes and that increases agility within the organisation.” To sum up, orchestration provides a unified financial crime management platform built to deliver a single, dynamic view of risk throughout the customer journey. No one can predict the future, but with these capabilities any business can be agile and flexible for whatever challenges comes its way
Published on 27 JANUARY 2023