A panel of industry experts at the Sibos 2024 conference on Tuesday discussed the critical role of data sharing and fraud detection in the modern financial landscape.
As CFOs navigate an increasingly complex and interconnected world, understanding how to effectively use data can be a game-changer in mitigating risk and protecting financial institutions.
According to Finextra, one of the key themes that emerged from the panel discussion was the power of collaboration during one panel discussion. By sharing relevant data, financial institutions can create a more complete picture of potential threats and identify emerging fraud trends.
This collaborative approach can help detect and prevent fraud more effectively, ultimately protecting institutions and their customers.
However, due to existing privacy laws and regulations, banks remain hesitant to share financial data. If data is transferred, it is done through lateral agreements. This approach, although available today, has its limitations. From a technology perspective, relying on side agreements does not scale well, and participation is entirely voluntary.
But something needs to be done, and quickly, said Sergio Antonio Dalla Riva, head of GTB product development solutions at Intesa San Paolo. “Indecisiveness leads to fragmentation, and scammers laugh.”
Advanced technologies such as artificial intelligence (AI) and machine learning (ML) are playing an increasingly important role in fraud detection. These tools can analyze large data sets to identify patterns and anomalies that may indicate fraudulent activity. Using artificial intelligence and machine learning, financial institutions can automate many aspects of fraud detection, freeing up resources for more strategic initiatives.
Data sharing and technology initiatives such as the SWIFT Federated Learning AI initiative launched at last year’s Sibos can provide critical mass for an industry-backed solution.
While the benefits of data sharing are significant, it is critical to address the privacy concerns associated with handling sensitive information. The group emphasized the importance of strong data management and security measures to protect customer data. This includes implementing strong encryption protocols, conducting regular risk assessments and complying with relevant regulations.
“The skeleton in the room is the fear that this data will fall into the wrong hands… Confidentiality is a key element,” said Michel Gentile, head of Asia-Pacific correspondent banking group at UniCredit, during a panel discussion.
By embracing collaboration, leveraging advanced technology, and addressing privacy concerns, financial institutions can protect themselves from the ever-growing threat of fraud. As the financial landscape continues to evolve, the ability to use data effectively will be a critical factor in ensuring long-term success.