Voice of the Industry

Financial crime technology in 2024

Monday 4 December 2023 12:44 CET | Editor: Mirela Ciobanu | Voice of the industry

Jason Boud, CEO of RegTech Associates examines how financial crime technology is evolving in the regtech market, providing commentary on some of the key parts of the financial crime market and evidencing this with data from the RegTech Associates Radar platform.


Unless you work in the financial industry in Australia or New Zealand or in the credit sector, the chances are you’ve never heard of illion. Illion’s history dates back to 1841, when the company was formed in New York City, later becoming known as Dun & Bradstreet. illion is now part of the Dun & Bradstreet Worldwide Network and offers greenID, an online verification and Anti-Money Laundering (AML) service that verifies the identity (ID) of customers in real time. According to the data that RegTech Associates hold in their Radar database ilion is officially the oldest company in the world that offers a financial crime technology (FCT) solution.

Despite this odd fact, the reality is the majority of FCT solutions have been created in the last 20 years, most in the last decade. RegTech Associates tracks, categorises, and collects information on the global supply of 640 financial crime products, a number that has increased by 68% in the last three years.

Notwithstanding this increase in the number of solutions in the FCT market, the effectiveness of financial crime prevention is arguably at an all-time low, as cases of fraud, terrorism financing, and money laundering spiral out of control. In an attempt to combat this, regulators around the world have issued 382 fines over the same period, costing the regulated firms a cool USD 22,334,851,148*.

So where are we with financial crime technology in 2023 and what does the near future hold?

This blog provides an overview of some of the key changes in the financial crime technology market over the last few years and looks at what the future may hold in 2024.


Digital transactions: growth accelerators or burgeoning problem area?

Digital payments, as a proxy for global digital transactions, are projected to reach USD 9.46 trillion in 2023 with the market expected to grow further to USD 14.78 trillion by 2027. India, Brazil, and China top the list by transaction volumes for digital payments but also with staggering numbers of fraud attempts (2,800 per minute in Brazil) and consumer complaints (750,000 per annum in India). 

It’s therefore clear that the rise of digital transactions is directly related to the increases in fraud and the need for better detection and prevention systems for identification, onboarding, and screening of payments and this is where FCT steps in.


Which problems first? Which solutions second? 

The to-do list to detect and prevent financial crime seems never-ending but there are three key challenges facing the industry:

✓            How to accurately conduct Identity checks and KYC?

✓            How to detect complex patterns of fraud from high volumes of data?

✓            How to keep up with typologies of criminal activity?

For buyers trying to identify solutions for each of these problems, as the diagram below shows, they are faced with a staggering array of choices across the 640 FCT products available. We’ll illustrate the types of products available by picking out three examples that can solve these three fundamental challenges.

Accurate Identity checks and KYC

According to data in Radar, there are close to 300 products in the Identity Verification, CDD, KYC, Onboarding, and CLM areas of the market. One company in this space is IDVerse (formerly OCR Labs) which aims to speed up identity verification (IDV) and improve accuracy while ensuring customers have a smooth and seamless experience. Using proprietary technology, they offer a biometric solution that combines optical character recognition (OCR), document fraud assessment, liveness detection, video fraud assessment, and face matching.


Detecting complex patterns from high volumes of data

Fraud detection and transaction monitoring account for a further 173 solutions in the market.  Fraud.net is an AI-powered enterprise risk intelligence platform that helps digital businesses quickly identify transactional anomalies and pinpoint fraud using artificial intelligence, big data, and live-streaming visualisations. Fraud.net's platform was designed to combat hard-to-detect fraud at digital enterprises in the ecommerce, travel, and financial services sectors. Its unified algorithmic architecture combines: 1) cognitive computing/deep learning, 2) collective intelligence, 3) rules-based decision engines, and 4) streaming analytics to detect fraud in real-time, at scale.


Mapping data to typologies of criminal activity

A niche but growing area of the market is how products and their users might keep track of the typologies of financial crime without being outperformed by criminal networks. Quantifind SaaS platform Graphyte™ provides due diligence, alert triage, and investigations for large financial institutions and law enforcement agencies, helping them combat financial risk and crime. The AI-powered platform delivers risk assessments on both individuals and organisations using AI identity resolution and dynamic risk typologies.


What next? 

The rise of innovative solutions in the FCT market sadly does not seem to correlate to the effectiveness of solving the increasing issues of fraud and financial crime around the world. The logical conclusion is therefore that either these solutions are ineffective, not being adopted or not being adopted effectively. We therefore anticipate that there will be a contraction and/or consolidation of the supply of financial crime solutions in the market during 2024 and 2025.

We also expect to see a new type of service offering wrapped around market-leading financial crime offerings, with large consultancies struggling to remediate KYC files using human analysts, a service underpinned by technology with humans in the loop must be a future service model for onboarding improvements and KYC file remediation. 

* According to regulatory analytics firm, Corlytics

About Jason Boud

Jason Boud is the Co-Founder and CEO of RegTech Associates, a global research company who use their analysis to provide strategic insight and advice to its clients. Jason has extensive experience working at a senior level in technology for JP Morgan and Credit Suisse, has worked in corporate innovation, and has 10 years of experience working with early-stage and growth startups.

Jason is an investor and advisor to early-stage companies and a mentor on the FinTech Innovation Lab programme. He is always advocating for the growth of the global FinTech/Risk and RegTech industry by speaking at events, writing about the market, and investing in early-stage startups.

Jason is a co-host of the Blockchain Unpacked podcast.


About the RegTech Associates

Radar tracks over 1700 RegTech and RiskTech products. If you want a closer look at the data, sign up for free today! Have you got an exciting financial crime use case? If you would like to feature in our upcoming blogs, contact us at radar@rtassociates.co

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Curious about how AI and RegTech might reshape your business? Drop us a line at info@rtassociates.co

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Keywords: regtech, artificial intelligence, machine learning, identity verification, data analytics
Categories: Fraud & Financial Crime
Countries: World
This article is part of category

Fraud & Financial Crime