Financial Crime World

Transforming Bank Operating Models: Addressing Evolving Financial Crime and Cybersecurity Threats

In today’s fast-changing financial landscape, banks must adapt their operating models to effectively address emerging threats in financial crime and cybersecurity. This transformation is critical for maintaining trust with customers, staying competitive, and ensuring regulatory compliance.

Key Transformations in Bank Operating Models

Unified Risk Management

Banks are adopting a unified risk management approach, integrating business, operations, security, and risk teams to:

  • Enhance intelligence sharing and collaborative responses to threats
  • Improve decision-making through better data analysis
  • Reduce the complexity of risk management processes

Enhanced Customer Identification and Verification

Artificial intelligence (AI) and machine learning are being leveraged to:

  • Improve predictive analytics for customer identification and verification
  • Reduce false positives in detection algorithms
  • Enhance the overall customer experience through personalized security controls

Optimized Customer Experience

The integrated approach enables banks to:

  • Segment fraud and security controls according to customer needs
  • Use automation and digitization to enhance the customer journey
  • Provide a seamless and secure experience for customers

Digital Trust

Unified risk management fosters digital trust, which is becoming a key differentiator for banks. This concept encompasses:

  • Security: at the heart of digital trust
  • Convenience: easy access to services without compromising security
  • Transparency: clear communication about security measures and risks
  • Control: empowering customers with tools to manage their own security

Holistic View of Financial Crime

The objective is to have a comprehensive understanding of the evolving landscape of financial crime, emphasizing:

  • Independent oversight and challenge through clearly delineated roles in each line of defense
  • A proactive approach to addressing emerging threats

Key Questions for Banks

When designing their target risk operating models, banks should consider:

  • Processes and activities: what needs to change or be implemented?
  • People and organization: who will be responsible for managing risk?
  • Data and technology: what tools and systems are required to support risk management?
  • Governance: how will decisions be made and roles defined?

Integration of Cybersecurity and Fraud Units

Most banks begin by integrating their cybersecurity and fraud units, enhancing:

  • Information sharing across silos
  • Coordination for greater risk effectiveness and efficiency

Redefining Organizational Lines and Boxes

To achieve the target state, banks must:

  • Redefine organizational lines and boxes
  • Update roles, responsibilities, activities, and capabilities required across each line of defense