For several years now, anti-financial crime (AFC) regulations have prohibited the operation of shell banks. A shell bank is a bank that has no physical presence in the jurisdiction where it is incorporated or licensed and no affiliation with a regulated financial group.
Though there are serious threats to global trade from potential trade wars, it continues to flow. Like clean drinking water, trade and the trade finance that secures it, are crucial to the health of the global economy and to that of individual nations. How can trade and trade finance be nurtured, especially in the face of costs and tensions that threaten to turn off the tap?
Trade finance fuels trade; if firms are unable to access it, this can have significant consequences for business development and global commerce. The current US$1.5 trillion gap between the demand for and supply of trade finance is undeniably a substantial barrier to economic growth. A recent BNY Mellon survey canvassed industry participants to discover what steps they think should be taken to close the gap, and the results point to two potential sources of relief: technology and regulatory revision.
SWIFT has a long history of enabling financial institutions to communicate with each other reliably and securely; thousands of banks use the SWIFT network for interbank messaging. Faced with the twin threats of intensifying cybercrime and growing compliance requirements, banks are scrambling to be secure and compliant while also profitable. SWIFT has developed robust financial-crime solutions that assist its members to comply with the gamut of regulations—from AML to KYC—profitably.
Digitally native customers are driving banks to jump into the future by embracing technological breakthroughs such as artificial intelligence, machine learning and robotic process automation. And in the process, banks are discovering the many advantages of these innovations, from cutting down on costly human errors to improving everything from fraud management, operational efficiency and trading. As they progress through their digital evolutions, many are reinventing themselves for the better.
When A.G. Bell invented the telephone, he had no idea that less than a century and a half later, the phone would be used to talk through—and text, shop, even bank with. Smartphones are small enough to be held in one’s hand and big enough to handle nearly any function. How are banks making fraud-vulnerable processes such as onboarding fast, efficient and secure by verifying the identity of customers?
In spite of the recent rise of protectionism amongst major trade partners, international trade growth is strong, with emerging markets providing the main impetus. Trade growth could be even stronger if not for the shortfall in trade financing supply relative to demand, a gap that is partly due to regulation compliance. Technology is coming to the rescue, not only in addressing the trade finance gap but ameliorating operations throughout trade channels.
Open Banking, which allows third parties to build applications around the activities of established banks, is curtailing the way banks have always functioned. The tried-and-true vertical-integration model, through which a bank maintains a firm grip on all of its operations, is being replaced by a more cooperative approach. How will innovative banks fulfill their roles as suppliers, producers and retailers of financial products and services in the Open Banking era?
Open banking is an emerging global trend and is expected to drive increased choice for how individuals and businesses consume financial services, is driving significant change as the financial services industry adjusts to a digitally-enabled economy, and is working to appropriately manage the risk of a new digital ecosystem.
Combating money laundering is no longer a choice but a must for banks. But the effort that must go into fighting it is daunting. How can technology, especially artificial intelligence and machine learning, battle the costs and drains on monetary and human resources required for AML compliance, making the whole process a lot easier and more effective? Can AI be trusted to do the job right?