By Saleh Mansour Alshowaier Sales Manager, Banking, Financial Services & Insurance at SAS
Fraud is on the rise on a global level. Unsurprisingly, fighting fraud and financial crime was the first out of ten trends for this year that SAS has identified. Financial crimes are estimated to cost the global economy more than $2.4 trillion, with the cost of compliance rising to over $180 billion. It is impacting economies and individuals, and the Kingdom of Saudi Arabia is no exception.
With the explosion of digitisation across industries, opportunities for fraud and financial crime have grown exponentially. It is very hard to find an aspect of our daily lives that hasn’t been touched by the convenience of using digital channels. From ordering food, and online shopping to paying bills, consumers and businesses have embraced the opportunities brought by digital transformation.
But there is a flip side to this increased convenience. The number of points of potential penetration and nefarious opportunities are only growing with an ever-increasing volume of transactions, payment rails, and new forms of digital interaction. New opportunities for fraud, financial crimes and scams continue and will continue to grow.
Scammers who wish to prey on individuals and organizations are quick to exploit the regulatory and legal gaps. There are, however, important steps that are being made to protect the financial sector, and its customers. Several months ago, financial industry regulator SAMA has released a “Counter-Fraud Framework” with a comprehensive set of compliance requirements for all financial institutions, covering fraud detection prevention controls, and response to fraud. And it is certain that regulation will continue to broaden and deepen as the public becomes more sensitive to any appearance of errors and inappropriate business practices.
At the same time, there is a need to find a fine balance with growing customers’ expectations of banking services and their appetite for the adoption of new technologies.
Financial institutions and regulators need to develop a capability to track fraudulent activities in real time, detecting and preventing potential harm. Advanced analytics, AI and machine learning (ML) enables financial institutions to monitor all payment transactions across the enterprise, make instant decisions regarding potential fraud, and understand fraud behaviour patterns across multiple lines of business.
What should be applied is a hybrid approach of advanced analytics, AI and ML to separate fraudsters from real customers. That way, the businesses and customers stay protected. As the leader in analytics, SAS combines techniques and tools to prevent fraud earlier, reduce false alerts, and better customer experience. Organizations are required to be diligent about improving the detection and prevention of fraud and expanding their capabilities to expose real threats more rapidly by using AI from detection through to disposition.
Numbers of financial institutions stands out as being a leader in the country when it comes to the innovative use of SAS analytics to protect their customers from more sophisticated fraud attacks such as ‘sim swapping’. This is when fraudsters assume the identity of the banks’ customers and take over their phone services using an “e-sim” so they can receive the customer’s OTP for a password change etc. By using real-time machine learning and device intelligence from 3rd parties, it is possible to detect such an event as it is happening and shut down any resulting transactions immediately. In short, by using these advanced methods, banks can detect and prevent fraud faster, and keep their customers safe whilst providing a seamless digital service.
As the Kingdom of Saudi Arabia is progressing towards its vision of becoming a financial hub of the region and with a growing number of digital unicorns, the need for protecting the financial stability and society from criminal intents such as money laundering and fraud activities is growing in its importance. As regulators and financial institutions are amping the regulations and capabilities to address the threats, AI and analytics have proven to be effective allies in the fight to curb nefarious intents efficiently and effectively.
