Risk Awards 2016
Financial crime comes in a growing variety of flavours, from trader misconduct to money laundering, fraud and cyber attack. Banks need robust defences against all these threats, but the real challenge is not in blocking the individual channels through which crimes may be perpetrated, but rather in taking a consistent and effective approach to the diverse range of risks across business lines.
Nice Actimize, a New York-based financial crime-focused technology vendor, last year surveyed a handful of its clients and found a typical investigation might involve as many as 15 steps, from the point of detecting suspicious behaviour to actually resolving the issue. That insight served as a reminder of the operational difficulties of combating financial crime.
"Banks really want to automate as much of this process as possible, and they only want staff to deal with issues that have been through a first level of triage and require human attention. Having technology in place that will automatically triage the first level of alert review can bring a huge gain in efficiency," says Chad Hetherington, general manager of case management solutions at Nice Actimize in New York.
The vendor's Enterprise Risk Case Management (ERCM) platform is one of the most popular in the sphere of financial crime, with more than 400 customers, including many of the world's largest banks. Since its original launch nearly 15 years ago, the product has evolved to keep pace with industry developments, benefiting from significant investment and innovation. ERCM continues to win plaudits for its ability to integrate with in-house processes and detection systems.
"We chose ERCM because it's very flexible with what we want to do, and allows us to create a very good workflow that is specific to the user population we have across geographies. The team has listened carefully and been very attentive to our needs," says a senior IT official at a large European bank that went through a request-for-proposal process with six vendors last year and chose Nice Actimize.
Recognising the growing pressure on resources in the banking sector and the need to automate processes that don't require human attention, Nice Actimize has invested over the past year in operational analytics to reduce the number of steps typically taken by financial crime analysts, as well as in a productivity offering to improve the efficiency of investigations.
Financial crime investigations can be laborious and resource-intensive, and we have made a big investment in our technology to enable clients to improve productivity and free-up resources
Chad Hetherington, Nice Actimize
Algorithms within ERCM are used to identify and automate steps that are already very familiar to a particular organisation and therefore require no intervention, while a so-called ‘productivity studio' uses visual dashboards to help management teams deal with bottlenecks that cause investigations to stall.
"Most banks have invested heavily in compliance in recent years, but their budgets are now locked down and they simply can't afford more bodies, so the only way they can make progress is by automating as much as possible. Financial crime investigations can be laborious and resource-intensive, and we have made a big investment in our technology to enable clients to improve productivity and free-up resources," says Hetherington.
The timing of the investment couldn't have been better, given the disparate and often manual nature of financial crime management among many institutions, and the growing need for nimble surveillance systems. A survey of more than 90 financial institutions published by Nice Actimize in September 2015 found that just 14% regarded their processes and systems as being fully integrated within a single infrastructure, while 31% have more than 20 analytics or detection systems in place to support their financial crime and compliance needs.
The vendor's vision, which appears to have been embraced by large swaths of the market, is to become the operational hub for investigations, effectively owning the layer above the detection systems, which tend to operate on a siloed basis. By taking a consolidated view across the institution, ERCM enables patterns to be spotted between investigations that might otherwise be missed.
"When you have an enterprise view of the various financial crime investigations that are going on, you can see if there is something suspicious or abnormal in one area that correlates to something similar in another part of the business. The case management approach reveals risks relating to a particular customer or product that would not otherwise be detected," says Hetherington.
But ERCM is not used only by the top layer of management seeking a bird's eye view of financial crime across the organisation. While a small bank might require access for just a few users, a large global bank may buy licences for thousands of users across different businesses and geographies.
"Usage varies significantly depending on the size and type of institution, but the reality is that financial crime touches on a number of different functions that all benefit from having a cross-enterprise view. Our ability to process large amounts of data and consolidate it into a single view of every customer and product is really what sets us apart from our competitors," says Hetherington.
The week on Risk.net, July 14–20, 2017Receive this by email