Banks more vulnerable to more fraud

Banks are laying off staff

Inefficiency in banks' anti-fraud divisions is leaving the industry open to a new swathe of financial crime, according to a report by analyst Datamonitor.

And a new wave of financial mis-statements, account manipulations and internal fraud could be exacerbated by the economic crisis.

“Financial crime is no longer simply about the laundering or theft of money. It is about high-profile issues such as customer data theft, financial misreporting, and many others”, said Jaroslaw Knapik, financial services technology analyst at Datamonitor and the report’s author.

“The extremely severe conditions within the global financial services industry are likely to increase the risk of potential internal and external fraud attempts," he said.

"Furthermore, cost-cutting pressures may affect anti-money-laundering/anti-fraud departments, among others. Indeed, some banks have already announced budget and staff reductions.”

Of 194 banks surveyed globally for the report, 64 per cent indicated that the top investment priority is technology that provides effective monitoring and detection capabilities with high alert accuracy.

Anecdotal evidence gathered for the report found that banks are increasingly combining their compliance, fraud, and security departments into a single unit.

Datamonitor said this approach will result in an emerging trend of technologies focused on providing a single view of anti-fraud operations across the business.

“There is a growing opportunity for business and technology consultants or vendors that can improve a bank’s understanding of the full range of anti-financial-crime-related processes which exist across the entire organisation," said Knapik.