Digital finance can help companies identify and prevent fraud faster. But it’s also caused a lot of issues over the last decade. In recent years, banks have been penalised for allowing rogue transactions resulting in hefty fines. As a result, financial legislation has tightened requirements internationally.
So how can banks comply with these new regulations? A data-driven, scalable digital platform can be key to greater security and simpler compliance.
With greater globalisation, financial transactions have become increasingly complex. And digital finance has further exacerbated this. The automation of financial transactions and the rise of cryptocurrencies make the financial world more vulnerable to fraud and money laundering. Nowadays, criminals can conduct their disruptive activities remotely and anonymously.
Given this digital environment, it’s more important than ever to know your customers. Is the customer who they say they are? What is their pattern of normal financial behaviour?
“Information is often fragmented across various bank departments,” says Erwin Boeren, Industry Solutions Lead Banking at Salesforce. “With increasing pressure from regulatory bodies, extra people are often hired to cross-check files, but this is a laborious task and can be done differently.”
A secure process begins with the careful onboarding of new customers. Can their identity be established by carrying out the correct checks?
“You can largely automate the verification process, for example by creating links from your systems direct to the Chamber of Commerce,” explains Boeren. But the real challenge lies in what happens next with their financial dealings, as Boeren explains, “If something that might indicate suspicious behaviour is going on, such as a customer claiming to run a single retail store but maintaining a network of private limited companies, can you reveal it quickly enough? The problem is often that individual indicators of unusual or suspicious behaviour are identified by different departments within the bank, but fail to create a holistic picture.”
For example, if the bank’s sales department has a view of the customer that does not correspond to the risk and compliance department’s view, there is possibly something wrong. But frequently, these departments don’t have the visibility to make the connection.
“By bringing data sources together on a single, scalable platform, you can keep an eye on customers more easily throughout their entire lifecycle at the bank,” says Boeren. “If transactions over time indicate suspicious behaviour, you may decide to adjust the customer’s risk profile and increase checks to confirm a pattern.”
A centralised view of the customer not only reduces the risk of malicious practices escaping your attention. It also contributes to the relationship between the customer and the bank.
“When you can see the direction an entrepreneur is taking, you can update your marketing accordingly to improve the quality of service,” adds Boeren.
For example, take New10 — an online business loan provider and subsidiary of ABM AMRO. The fintech company was founded in 2017 with the aim of setting a new standard in business lending for SMEs by providing greater speed, transparency, and convenience. It’s now a leader in digital finance.
“New10 has set up its systems so that when the relevant customer data is provided, the company can quickly form a holistic customer view, and based on that, provide a definitive response to a loan request within just 15 minutes,” reveals Boeren. “This kind of speed and transparency is exactly what customers want.”
Sales is just the beginning of the customer journey at New10. It is integrated with customer service in a single, scalable platform, so all the necessary information is at agents’ fingertips to help them effectively resolve customer queries and problems. The next step is to take a more personalised approach with products and services that match a customer’s financial interests.
“In order to excel in the financial world at both customer service and loan provision, the technology behind the customer journey must be optimised,” says Boeren. “New10 has got its processes and technology just right. With a robust and consolidated platform, fintech also has the scalability it needs to grow.”
With all the customer data together on a central, scalable platform as a single source of truth, it’s also much easier for regulatory bodies to check it — you just have to give them access.
To find out more about trends in the financial services industry during the pandemic and uncover other insights from 2,800 managers about changing customer needs, download our Trends in Financial Services report.