Automated technology could save financial institutions nearly $10 million a year
Pitney Bowes, a global technology company that provides commerce solutions in the areas of eCommerce, shipping, mailing, and data, today announced a new screening solution to help financial service providers more accurately verify the identities of their customers to help achieve regulatory compliance in the areas of sanctions screening and watch list management.
Known as Pitney Bowes Spectrum Screener, the solution has been found to reduce the amount of false-positive detections by nearly 60% and deliver cost-savings of up to $10 million annually for large-scale financial institutions.
At the same time, it can help alleviate challenging regulatory, Know Your Customer (KYC), and customer identity compliance issues that confront the industry today. Organisations like EY are already taking advantage of Spectrum Screener to address compliance regulations.
According to a recent Aite Group report, “The AML of Tomorrow: Here Today,” the United Nations Office of Drugs and Crimes estimates that two to 5% of Global Domestic Product (GDP) is laundered annually, which translates to $USD800 Billion-$USD2 Trillion.
As if the responsibility for AML and detecting terrorist financing weren't enough, financial service providers are also on the hook for global anti-corruption sanctions screenings, and reputational risks cite the report.
Today, financial service providers spend millions in compliance infrastructures, with a large portion of the spend attributed to human capital.
One bank in the Aite Group report employs roughly 5,000 people who are tasked with investigating these transactions and filing Suspicious Activity Reports (SARs). Unfortunately, many systems used to detect suspicious activities result in 95-98% false-positives.
“Regulators expect financial institutions to find every needle in the haystack — false-negatives are not acceptable. This expectation leads to an abundance of false-positives in many current solutions,” says Julie Conroy, Research Director for Aite Group. “Pitney Bowes Spectrum Screener is a great example of a next-generation screening solution focused on reducing false-positives and alleviating the investigative burden.
Without automatic screening solutions that identify and de-duplicate parties, financial service providers struggle to look across all lines of the organisation and determine if an entity (person or business) is the same across various business lines.
Often, this lack of view can cause false-negative alerts, which will ultimately result in fines if missed. Therefore, most FinServ organisations create alerts on too many transactions, or false-positives, creating an increased investigative burden on an already overworked staff.
Spectrum Screener reduces the investigation burden for financial service providers by analysing customer data across the organisation, resolving identities and matching those identities against cleansed sanctions lists, prohibitions, Politically Exposed Persons (PEPs), as well as lists created internally within an organisation.
Beyond customer data, Spectrum Screener combines technologies like Natural Language Processing, advanced analytics, and machine learning to improve overall match confidence.
“With Spectrum Screener, our initial implementations have proven to reduce millions of dollars in operations expenses, reduce burnout and turnover, reduce training expenses, and ultimately improve productivity and compliance,” says Nigel Lester, ANZ MD Pitney Bowes Software. “We're removing some compliance complexity for our clients and offering the peace of mind that then allows them to focus on investigations that pose a real threat.