Does your data and technology vendor really understand your business?

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Financial crime screening vendors that lack sector-specific knowledge can create more problems than they solve...

Financial crime screening tools are among a raft of business-critical risk technology solutions to have become a top priority for organisations looking to automate, integrate and digitalise their operations. But without proper implementation by a vendor with high levels of sector expertise, these solutions can create more problems than they solve.

How well do your financial crime compliance data and software vendors really know your specific industry and how willing are they to adapt their solutions to meet your specific business needs?

This short article explores why it’s essential to partner with tech vendors that know your business and sector inside out and can collaborate closely with you on deployment, ensuring the solution is customised to your needs and is finely calibrated to meet the unique risks, challenges and nuances of your industry.

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The need for sector-specific calibration

A one-size-fits-all fraud, AML screening, or identity verification solution will not effectively protect your organisation against evolving business risks. Building successful risk screening and authentication processes relies on a deep understanding of the intricacies of a particular sector.

Transaction patterns, customer behaviours, and risk landscapes vary significantly by industry. A red flag incident in one sector, might be a routine occurrence for another. Risk screening and prevention solutions needs to be finely calibrated to understand these nuances and adapt to specific rules.

Any data or tech vendor lacking specific industry experience will be unable to offer professional guidance on how to effectively calibrate their solution. The likely outcome will be significant volumes of false positives requiring valuable time and resource to remediate, leading to delays, a higher risk of inaccurate decisions and potential negative impact on customer experience and brand reputation.

Many companies regularly experience false positive rates as high as 90% on their fraud and financial crime screening activities. The resulting drag on process efficiencies, resources and customer experience is unsustainable in a competitive environment. Only by partnering with a technology vendor that really understands your industry can you minimise these inefficiencies and achieve frictionless and streamlined screening operations that improve rather than impact speed of delivery to customers.

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Accuracy and relevance of risk flags and signals

Industry-specific calibration of risk screening activities ensures your system can reliably distinguish between normal and suspicious events. For instance, high-value transactions received and sent by a customer of an online investment company may appear normal, but similar transactions sent by a typical high street bank or consumer finance customer, might prompt a red flag.

Working with a vendor who understands these nuances can help you significantly reduce false positives (and negatives) as soon as the new software is implemented, enhancing the precision of your screening activities and speeding up time-to-value of your investment. Businesses that take time to find their perfect vendor partner quickly achieve a positive ROI and avoid wasting valuable time and resource retrospectively calibrating new solutions in a live environment.

A recent analysis from McKinsey shows how important it is to achieve accuracy by working with a vendor/partner who can bring you the very latest insight and analysis techniques, and help to deploy them in a way that is relevant to the specific context of the industry you operate in.

Anticipating industry-specific risks and threats

A market-leading data or technology vendor will be able to confidently predict both current and future risks facing your sector based on a deep understanding of how those risks are evolving. This understanding will stem from a combination of vast industry experience on the part of its expert technologists and an active engagement in research and development designed to push the boundaries of accepted thinking. Integration of new, emerging technologies such as AI and biometrics is essential to combat the latest fraud tactics, ensuring you stay one step ahead of potential threats.

Achieving such deep levels of sector insight requires global scale and resource. The insight and intelligence afforded by the more than 90 billion transactions detected annually by the LexisNexis® Digital Identity Network, for example, led to the Global Cybercrime Report – a detailed, yearly analysis of global fraud volumes and threats, by sector, that is used by thousands of organisations as a regular barometer of business risks to calibrate their defences. Similarly, our global operations produce a series of annual insight reports, including the True Cost of Fraud and the True Cost of Failed Payments.

LexisNexis Risk Solutions also worked with futurist research agency, The Future Lab to produce a report exploring the four pillars of trust required to establish the necessary digital trust ecosystem – dubbed an Authentaverse – to support safe and secure, seamless and passwordless transactions in future iterations of the internet.

The deep learnings achieved from such undertakings ultimately help leading vendors by strongly influencing their solutions design and creating more effective, secure and future-ready solutions for customers.

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Understanding your compliance landscape

Industries operate within strict regulatory frameworks, each with their own specific set of compliance requirements. A risk screening or prevention solution must align seamlessly with these regulations to avoid legal implications and reputational damage. A vendor with knowledge of the relevant regulatory landscape can build compliance into the design, providing you with peace of mind that your customer onboarding, AML screening and fraud controls not only accurately detect risks but also adhere to all relevant compliance standards, from day one.

The annual True Cost of Compliance Report from LexisNexis Risk Solutions is a one-of-a-kind deep-dive analysis of the compliance screening operations carried out by the UK financial services sector, conducted by leading economists, Oxford Economics. The analysis arrives at an accurate figure for the true financial impact of regulation on the sector and a detailed breakdown of screening activities and efficiencies, helping to inform the strategies of both policy makers and regulators.

Effective calibration of financial crime screening is one of the FCA’s key areas of focus and so organisations looking to future proof their screening capabilities in tune with where the regulator is focussing need to ensure they are taking a close enough look at how they are using calibration optimisation to its best advantage.

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Seamless integration with your business processes and architecture

Deployment of effective risk screening and prevention solutions should minimise, rather than amplify, disruption to your normal business operations! Successful deployment is achievable if you work in partnership with the right vendor. The perfect partner will take the trouble to really understand your business and technology landscape. They will collaborate with your teams to streamline integration of your risk solution technology and ensure those feed seamlessly into your existing business processes. The goal should be minimal friction for customers and employees and a positive user experience combined with the highest possible levels of risk prevention.

Be sure to check that a vendor has the requisite resources and experience to do this before moving ahead. In this regard, you might look for a partner with a strong track record of delivering risk orchestration solutions – an end-to-end, configured financial crime lifecycle using simple no-code integration. Leading organisations are now adopting this tool to achieve even greater, seamless process efficiencies. This eBook, An Introduction to Risk Orchestration, from LexisNexis Risk Solutions, explains the benefits in more detail. For more support on how to implement a risk orchestration system – written by experts with specific experience of building and developing them – read this Build Versus Buy article.

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The advantages of working with a risk technology partner vendor that truly understands your business and your industry can’t be overstated. No matter how competent the player, a badly tuned violin will only make for an ear-splitting sound. Similarly, business-critical risk screening or prevention solutions deployed without the fine tuning that can only be achieved by someone with years of on-the-job industry experience, will not give the levels of protection your business deserves.

From accurate risk flagging, through to compliance with industry-specific regulations, the benefits of partnering with a strong vendor familiar with your industry and with the depth of professional services resource available to support deployment, are huge.

The market is full of risk technology and data services vendors offering to help create better efficiencies or effectiveness in addressing your fraud, financial crime or verification risks. But how many of them will take the time and trouble to get to know your business and to make sure you’re supported and understood throughout the process? How many are willing to go the extra mile and to work with you and your teams to tailor the solution to your specific needs? How many have the requisite knowledge and experience of your industry to make sure that when you do deploy a solution it does what’s intended and doesn’t create more problems than it solves?

That’s the difference between a risk technology vendor and a true partner.

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