2022 has been the UK’s economic annus horribilis and proved that financial institutions need better tools to manage business risk

Banks and other lenders, impacted by severe economic conditions, are looking to serve a population struggling through the cost-of-living crisis by further extending their products and services. Moving from risk management to risk orchestration can help them to combat the rising threat of financial crime whilst also providing a great customer experience.

This year’s been a tough one. Amidst extreme geopolitical turmoil, spiralling inflation and soaring energy bills, millions of people are facing the choice of heating or eating as we approach winter.

To make matters worse, recent figures from UK Finance revealed £609.8m was lost due to fraud and online scams in the first half of 2022. Criminals will always look to exploit situations where people fear for their finances; we saw this during the pandemic, and we’re seeing it as the cost of living crisis tightens its grip.

Lenders and other financial service providers have never had such a critical role to play. It’s imperative they provide responsible products and services to help ease the pressure, but this is increasingly difficult to do amidst the myriad risks in today’s economy. People’s financial situation is changing day-to-day, so how can financial institutions respond?

The industry is signalling a stronger shift towards tech

In September, we teamed up with Sapio Research to survey more than 200 finance organisations across the UK about their views on financial crime and fraud, and how they plan to evolve their operations.

We found four in ten (43 per cent) believe the cost of living crisis will lead to a further increase in financial crime and other fraudulent activities over the next 12 months as scammers target vulnerable consumers struggling with rising bills.

As a result, more than two-thirds (69 per cent) plan to increase investment in technology to fight this rising threat, with 59 per cent prioritising risk orchestration platforms to better protect both their operations and their customers. These findings corroborate our recent report, Tech Blockers 2022, which uncovered a growing appetite for evolution, automation and digital transformation amongst banks, fintechs and other lenders.

Most within the industry recognise that significant gains in efficiency and cost effectiveness are achievable through a smarter use of data and technology. And many are now moving from risk management to risk orchestration as they seek to better connect the systems and data sources used to combat fraudulent and criminal activities.

The majority of respondents (74 per cent) to our survey were already aware of risk orchestration platforms, identifying the main benefits as unlocking the ability to automatically track customer transactional behaviour over time and flag anomalies (48 per cent); being able to bring all customer checks into a single, unified, digital platform (46 per cent); and creating risk-based financial crime and fraud screening bespoke to varying risk appetites (41 per cent).

Automation and efficiency – but not at the cost of compliance

Orchestration platforms, such as the LexisNexis® RiskNarrative™ platform, provide a welcome end-to-end solution for customer onboarding and ongoing monitoring, incorporating AML screening, transaction monitoring and case management via a single, API integration.

They’re an increasingly attractive proposition, because they cover all three elements that financial service providers are looking for: customer experience, efficiency and compliance.

Banks and other financial institutions know they need to provide the best onboarding experience possible in the face of unprecedented external pressures and more demanding customer expectations. People simply won’t tolerate friction anymore. Orchestration platforms provide that seamless user experience, tying together multiple processes whilst providing a single audit trail.

Traditionally, onboarding can be a labour-intensive task – a disjointed process that creates the potential for manual errors to creep in. This is where automation provides value for financial institutions, enabling the automated, rapid processing of low-risk applicants thereby allowing a firm’s KYC specialists to spend their time on higher-risk cases. Importantly, everything is captured in the indelible audit trail which allows them to check exactly why accounts had a certain KYC outcome and all the steps taken to reach that decision.

Of course, to be fit for purpose any new solution needs to be underpinned by a mantra of maintaining compliance. A core strength of risk orchestration platforms is they are easily configurable solutions that can quickly be adapted in line with business growth and changing regulations – which are evolving at a greater pace than ever. This allows firms to demonstrate compliance and react to changes in regulatory and market conditions.

Perhaps their greatest draw is that a risk orchestration platform reduces complexity and increases the speed of onboarding in this most competitive of economic times.

Our study revealed that, on average, financial service providers rely on five external vendors for data sources or solutions to prevent fraud and financial crime across their customer lifecycle. Risk orchestration platforms can effectively reduce this to a single contract, whilst simultaneously allowing firms to continue using the multiple data and solution providers they’ve come to trust, reducing organisational silos and manual processes and delivering more informed insights that enable increasingly accurate risk assessments.

We’ve spent much of this difficult year engaging with the industry, and it’s clear that banks, fintechs and other lenders want to optimise financial crime and fraud prevention efforts whilst ensuring they remain compliant and minimising any unwanted side effects, including negative customer experience and complex vendor management. Risk orchestration platforms provide them with the necessary agility to navigate these volatile times.