The rapid adoption of artificial intelligence and machine learning in all corners of the financial sector, particularly in anti-money-laundering (AML) efforts, has excited and inspired onlookers and participants alike. But as with all innovations, there are pitfalls to unquestioning acceptance that can actually worsen the situations these technologies are meant to address. Human intelligence must work cooperatively and in the lead role alongside AI and ML to guarantee the best results.
It is becoming clear that trade digitisation has huge potential to unlock access to world trade for small-to-medium-sized enterprises (SMEs). The move away from laborious, manual, paper-based processes will lever simpler access to trade finance
It’s not news that many economies of the developing world face barriers to financial inclusion, making it difficult for citizens to both borrow and save; but the good news is that help has arrived in the linking of mobile payments with remittances. From sub-Saharan Africa to Latin America and the Caribbean, mobile money is bringing the previously underbanked into the fold.
API-based Open Banking, a financial technology born in Europe to achieve enhanced transparency, is among the latest banktech innovations that seem intent on shaking legacy banking systems to their core. The good news is that both customers and their banks alike stand to gain from the more competitive environment and stricter data processing that will result from its widespread adoption.
The details matter when it comes to sensitive banking data, especially relating to payments. Regulators are clamping down on banks in response to the threats posed by ever-increasing criminal and terrorist activities and are requiring specific information about not only the sender but also the recipient of a payment; fortunately solutions exist in the form of MT structured message formats.
The global impact of money laundering is staggering; with related transactions estimated at 2 to 5% of global GDP – amounting to up to $2 trillion. The IMF defines money laundering as a process of conducting financial transactions in a manner that obscures the link between funds and their origin.
Many bank managers are grateful that they do not live and work in war-torn countries; but guess what, hardline terrorists are bringing the battle close to home. Within the current world climate, banks, small and large, have a responsibility to participate in the war against domestic terrorism by implementing vigorous anti-money-laundering/counter-terrorist-financing programs.
Global trade growth depends on trade finance, which is not meeting demand. Regulatory compliance, protectionism, costs and complexities of technology have restricted banks’ willingness to provide trade finance. Measures such as collaboration, innovation, improved attitudes are a must if this fuel for the global trade engine is to be adequately supplied.
An entire industry – card payments acquiring and processing – relies its risk management methodology on chargebacks optimization as its main, if not sole, operational target.
For banking and financial institution executives – and for their investors – 2016 has begun on a sour note. From the largest money center banks to small local institutions, double-digit earnings declines were commonplace in the first quarter, as