90% of Australian FIs plan to replace financial crime management solutions within three years in response to fraud threats

The COVID-19 landscape has brought with it a rise in fraud typologies and complexity as criminals look to take advantage of people’s increased vulnerability paired with the rapid digitisation of more critical services. By June 2020, only a few months into the pandemic, the ACCC’s Scamwatch had already received more than 2700 reports that mention the coronavirus, resulting in more than $1.1million in losses.

So, how are Australian FIs arming themselves in the fight against fraud? A recent IDC Infobrief commissioned by GBG found more than one in five (22%) Australian banking and financial services institutions and eCommerce providers reported using in-house built origination/application fraud management systems. A further 21% are considering building their own next-gen origination fraud system.

Interestingly, the report found 88% of Australian FIs are planning on replacing a solution that was self-built within the next three years. About one in five are replacing their solutions every 12 months (22%) or every two years (18%), and almost half (48%) are replacing their in-built solution every three years.

As recently shared with CFOTech Australia, Carol  Chris,  Regional  Manager for Australia and New Zealand, said: “the past 18 months has seen record numbers of scams and fraud instances as scammers capitalise on this era of hyperconnectivity, with financial crimes escalating in complexity and sophistication. Building an anti-fraud system requires a huge number of resources but the biggest challenge remains to be the upkeep of the system. A good financial crime management system needs to continuously meet regulatory requirements, prevent emerging and increasingly innovative fraud typologies, and deliver a high standard of fraud detection accuracy to avoid penalising legitimate customers.”

Michael Araneta, Associate Vice-President, IDC Financial Insights, also commented: “Financial institutions now operate on rapidly digitalising consumer markets, and they are facing new risks in financial crimes and fraud. Their response must be new, ultimately enabling them to respond fast and effectively to limit the adverse impact to both the institution and the customer. To attain this speed and effectiveness, they will need to pool together a set of technology solutions, skills, and intelligence — and all of them from trusted technology partners. The choice to build, buy, or rent these solutions is up to the bank based on its business, but the effort should be more intense than ever, to effectively tackle modern-day financial crimes.”

It is clear Australian banks need to priortise fraud prevention strategies, but what worked five or even two years ago is no longer going to cut it in today’s rapidly changing threat landscape. Whether you buy, build or rent, FIs need to remember that fraud prevention cannot be a set and forget strategy, and choosing a solution that can adapt alongside new threats and changing regulation is going to be key going forward.

To download the full IDC Infobrief go to: https://www.gbgplc.com/apac/resources/idc-infobrief-build-buy-or-rent-evaluating-an-effective-strategy-to-fight-rising-financial-crime-and-fraud-in-asia-pacific/#form

To find out more about GBG’s financial crime management solutions, you can visit: https://www.gbgplc.com/apac/fraud-compliance-management/