Banks Shift from Silos to Integrated Model for Cybersecurity and Fraud
As financial institutions face increasingly sophisticated criminal threats, many are abandoning traditional siloed approaches to cybersecurity and fraud management in favor of a more integrated model.
The Need for Integration
The shift is driven by the recognition that threats can appear anywhere and that isolated defenses are no longer effective. By integrating their cyber and fraud operations, banks can:
- Predict risk more effectively
- Improve detection rates
- Enhance customer experience
Strategic Prevention: Predicting Risk Rather than Reacting
To stay ahead of criminals, banks need to redesign their customer and internal operations based on a continuous assessment of actual cases of fraud, financial crime, and cyber threats. This approach, known as strategic prevention, involves predicting where threats will appear rather than simply reacting to them.
Efficiencies of Scale and Processes
The integrated model can improve threat prediction and detection while eliminating duplication of effort and resources. By integrating their operations, banks can:
- Clarify roles and responsibilities
- Develop consistent methodologies and processes
- Build understanding and ownership of risks
Data, Automation, and Analytics
Integration also enables the anti-fraud potential of a bank’s data, automation, and analytics to be fully realized. By integrating data from separate functions, banks can:
- Enhance customer identification and verification
- Reduce false positives in detection algorithms
- Improve regulatory preparedness
The Customer Experience and Digital Trust
An optimized customer experience is another benefit of the integrated approach. Banks that excel in fraud management are more likely to build digital trust with their customers, a key differentiator in an increasingly competitive market.
A Holistic View
Ultimately, the goal is a holistic view of the evolving landscape of financial crime. To achieve this, banks must integrate business, operations, security, and risk teams for efficient intelligence sharing and collaborative responses to threats.
How to Proceed?
Banks that are redesigning their fraud-risk operating model must ask key questions about:
- Processes and activities
- People and organization
- Data and technology
- Governance
By probing these questions, they can create a more integrated approach that enhances risk effectiveness and efficiency. Case studies of leading banks demonstrate the benefits of integration.
Conclusion
As criminal threats continue to evolve, it’s clear that a more integrated approach is essential for banks to stay ahead. By consolidating their risk functions under a holistic approach based on the same data and processes, banks can reap the benefits of integration and better protect themselves and their customers from financial crime.