Latest research from Norkom Technologies exposes banks’ increased vulnerability to fraud and diminished ability to prevent it
Dublin, Ireland - 250 financial crime professionals working in banks across the globe say measures taken by their organizations to reduce costs in the wake of last year’s financial crisis are leaving them and their customers increasingly vulnerable to criminal attack.
Respondents in Norkom’s annual survey of financial crime fighting activities in the world’s banks, say that cuts to their own departmental spending plans are weakening their ability to keep pace with a rising tide of criminal attack and that general cost cutting across their businesses is further weakening the banks’ defenses.
- 71% of respondents say fraud attacks against their business have increased over the past year and it’s clear that, not only the number, but the severity of attacks is rising.
- 67% say their financial losses to fraud have grown over the same period. For almost a quarter (22%) that growth has been greater than one-fifth.
At the same time, around a third have seen their financial crime prevention budgets reduced. For some, those cuts have been dramatic. 12% say they’ve lost a quarter of their anti-money laundering (AML) budget. The figure is only slightly lower for fraud at 9%. 50% agree that general cost-cutting across their organizations is weakening their defenses.
“It’s ironic that the very actions banks are taking to shore up their damaged finances may sabotage their chances of recovery,” says David Dixon, Norkom’s Director of Global Solutions. “However, we do see a path out of the dilemma. There is clear evidence that advanced crime fighting approaches, underpinned by consolidated technologies, can reduce fraud losses and, simultaneously, reduce operating costs in crime fighting departments.”
Last year’s research revealed that 64% of organizations had reduced operating costs by up to 30% by using consolidated crime fighting technologies. 66% also said their ability to detect crime had improved by up to 40%. This year’s research reinforces those findings. 79% of respondents using a consolidated technology approach said that it had allowed them to improve their ‘percentage of fraud detected’ performance (the amount of fraud detected and prevented as a proportion of total fraud reported to them by their customers). 63% have also seen their operating costs decrease.
There is clear evidence, too, that technology can help in another way, directly in relation to fraud. 56% of all companies using common case and workflow management tools within their fraud technology solutions are achieving dramatic reductions in their fraud losses, thanks to the ability it gives them to take action quickly to stop crime in its tracks.
“In the final analysis, two lessons emerge from this research,” says Dixon. "First, that attempts to save money by cutting financial crime budgets are likely to be counter-productive. Second, that fraud losses can be reduced through the use of consolidating technologies which, in turn, allow business processes to be streamlined. So, if the twin imperatives are to cut losses and stem costs, there’s good news on both fronts.”
42% of respondents say they now have a single software solution – deployed enterprise-wide – to detect and investigate AML; 17%, for fraud. 48% of the remainder have deployed an overarching technology that consolidates information from their different detection systems in order to enhance investigation management. A further 30% plan to implement such technology within the next 12 to 24 months.
For your free copy of Norkom’s research whitepaper, ‘Fighting crime – defending the bottom line’, log onto www.norkom.com/press/whitepapers.html.
NOTES FOR EDITORS
Research methodology
This report is based upon original research conducted among senior executives from a representative sample of international financial services organizations. The respondent group covered the full spectrum of financial services companies including retail banks, commercial banks and integrated financial services companies. 41% of the organizations polled had assets between US$10 billion and US$500 billion, while 12% had assets over US$500 billion.
Norkom Technologies (AIM: NORK.L, IEX: NORK.IE) enables financial organizations to take intelligent action, control defenses, and evolve strategies against fraud, money laundering, and other types of financial crime. By combining a unique investigative technology platform with deep domain expertise, Norkom has established a solid track record of reducing financial losses, protecting users’ reputations, improving operational efficiencies and lowering the cost of information technology.
For more information, please contact:
Fiona McLoughlin, Marketing Manager
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