Banking Review

Crime busting

There are a plethora of financial crime solution vendors whose services
help banks fight fraud and money laundering, but which ones do it best?

BY JAROSLAW KNAPSIK

The cost of combating financial crime is on the rise. This in turn is driving banks to seek synergies between anti-fraud and anti-money laundering (AML) systems and to look for solutions that allow crime detection with high accuracy that can reduce related costs.

As a result, the competitive landscape has become crowded with a large and diverse set of solution providers, making the selection process more complicated for banks. In response to this, Ovum has identified four anti-financial crime solution vendors that for most retail banks will be worth short-listing in an enterprise-wide platform selection process.

These vendors provide offerings that combine strong underlying technology with a broad functionality depth and have established a leading market position from a worldwide perspective. This selection includes Detica NetReveal, Fiserv, NICE Actimize and SAS Institute. The detailed analyses of this solution area are published in Ovum’s report Selecting an Anti-Financial Crime Solution in Retail Banking.

Standardising anti-fraud and AML processes

To avoid duplication of resources and processes, and to reduce the overall cost of fighting fraud and money laundering, banks must ensure that their applications are linked to shared components across point solutions. However, not many banks are at the stage of standardising processes and managing data across various areas of risk and compliance.

It is essential that banks integrate all their anti-fraud and AML solutions as seamlessly as possible. This will not only lower the overall cost but will also heighten the effectiveness of financial crime detection and prevention.

Well-integrated anti-fraud and AML systems can enable banks to gain a more precise view of financial crime activity, and information derived from numerous channels can provide an invaluable source of crime intelligence. If this information is used effectively, it can reduce the overall cost of combating financial crime and can improve customer satisfaction.

Ovum’s shortlist: Detica NetReveal, Fiserv, NICE Actimize and SAS Institute

After their acquisition by BAE Systems, Detica NetReveal and Norkom Technologies recently merged their operations and consequently unified their go-to-market strategy and started to integrate their solutions. It is still too early to comment on the outcome of this integration, but Norkom was already a leading vendor in this area, and enhancing this offering with Detica’s technology will only boost the technology’s functional depth and innovativeness, including the embedding of link analysis technology, for example. With a number of functional components on offer, Detica is now able to offer solutions that address almost every aspect of financial crime, which is key for enterprise-wide anti-financial crime platforms.

Fiserv
The vendor built out its anti-financial crime offering mainly through the acquisitions of NetEconomy and CheckFree. Since then, Fiserv has made substantial progress in integrating various siloed point solutions and standardising on underlying technology. The company also has a very strong impact on the banking industry, offering solutions for almost any technology a retail bank may need. This translates to aggressive customer acquisition through cross-selling, as many existing Fiserv clients are adding anti-financial crime solutions from the same vendor. The growing customer base and revenue quickly boosted investments into further development and ongoing integration of point solutions on offer. Consequently, Ovum expects Fiserv to retain its strong position and evolve further.

NICE Actimize
The vendor specialises only in anti-financial crime solutions. Recent acquisitions, such as that of Fortent, only boosted its expertise in this area. NICE Actimize offers a high level of out-of-the-box functionality for nearly every aspect of an enterprise-wide platform, including both anti-fraud and AML sides. Actimize users mainly indicate well-performing risk models, with high fraud detection and low false-positive rates, as the major strength of the solutions on offer. With an already proven customer base, the vendor has a significant impact on this market. In addition, most of the components are based on a single underlying technology platform, Analytics Intelligence Server, which makes it easier for retail banks to manage fraud and money laundering processes in a more unified way.

SAS Institute
The company is a relatively recent entrant to the anti-financial crime packaged software solution market, but with leading underlying technology, scalability and flexibility, SAS Institute has managed to leverage its overall strength in business analytics to become a significant solution provider in this area. The vendor provides strong technology tools for the development of risk models, and together with its clients it has developed dedicated models that detect various types of financial crime. Now the functionality is packaged into dedicated solutions, which provide decent out-of-the-box functionality but most of all the flexibility needed for customisation and further development.

Jaroslaw Knapik is a Senior Analyst within Ovum’s Financial Services Technology team.