Can Fintech Help Prevent Financial Crime?

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Can Fintech Help Prevent Financial Crime
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Can Fintech Help Prevent Financial Crime?

Banks and financial crime go hand-in-hand, but with the increased popularity of Fintech and digital banking, everyone wonders, will Fintech prevent financial crime?

At first glance, it seems like Fintech would be much riskier. After all, you’re banking online from your phone versus in person with a bank teller. But there is much more to banking than when you stand in front of the teller. There’s a lot more risk than most realise that goes on behind the scenes at a traditional bank.

So how can Fintech help?

Verifying Customer Identity

You’d think it’s easier to open a bank account online. Anyone could open one in your name, right? Wrong.

Digital banks put customers through much more rigorous procedures to open an account, making it harder for ‘just anyone’ to open an account. Banks follow a Customer Due Diligence procedure that proves they verified your identity beyond a reasonable doubt. If they aren’t sure you are who you say you are, you can’t open an account.

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Using Machine Learning for Fraud Prevention

One major advantage fintech has over traditional banking in preventing financial crimes is the machine learning capabilities of the programmes.

Fintech can detect fraudulent transactions in less than a second, whereas it may take a traditional bank a lot longer (and after a lot more financial damage). Machines can analyse prior data (transactions) and compare them to the current transactions to realise when something is ‘off.’

Using Data Manipulation

Perhaps the largest benefit Fintech has over traditional banks when fighting financing crime is data manipulation.

AI can assess data lightspeed faster than humans or even the programmes traditional banks use. This means Fintech banks can realise financial crimes much faster, putting a stop to them before too much damage occurs.

New AI algorithms are created every day especially as the use of Fintech increases dramatically in our world of social distancing and making appointments just to see a bank teller. AI can manage thousands of data points at one time versus what a human could do, highly increasing a Fintech’s ability to prevent crime, not just stop it.

Educating Consumers

Fintech can continually educate clients on how to stay safe. They can send out mass warnings when there’s a breach or trending hack so users know how to protect themselves.

Fintech programmes can also put the right steps in place fast to protect their clients. This isn’t something human-operated banks can do, at least not nearly as fast as digital banks. This helps prevent, slow down, and stop financial crimes in their tracks. 

Financial crimes will always happen – no programme or human is 100% perfect. However, with the use of the right technology, Fintech can take the world by storm, stopping hackers and protecting consumers’ bank accounts. Make sure you know what your Fintech bank does to protect you and your money before choosing one so you decrease your chance of dealing with a financial crime. 

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