Change is afoot in how organizations serving customers online can deliver fraud detection and improve the customer experience. The disruption is happening in every sector, especially banking and insurance. Growing customer expectations for immediate approval of new accounts and faster payments, for example, and a shift to real-time technology are converging on the financial sector at the same time, adding complexity and creating an urgency for action. This convergence of expectation, regulation and technological opportunity seems to be in danger of encumbering some of the sector’s major players. It could also potentially limit their competitive agility over fintech and challenger banks, which are typically less burdened by IT legacy and widely dispersed customer management and compliance teams.
In the past, uncertainty and a need to act quickly saw security fraud teams throw people, or money, at the problem. While this Hail Mary approach may have provided organizations some kind of solution, even if temporary, today’s approach leans toward embracing controls and fraud detection and user authentication technologies that flex to match risk appetite and business goals.
Evolving Compliance Demands, Growing Costs
But security is not the only ongoing issue the financial and insurance sectors must reckon with. These heavily regulated industries must continually spend more to keep up with evolving regulatory demands. With an estimated £650 million per year in staff costs and a further 5–15 percent of all resource across U.K. financial services (FS) institutions, compliance is clearly a significant operational burden — if not the most important one — affecting U.K. FS companies in 2019.
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