A survey conducted by FICO, a global data analytics software company, indicates that 82% of Thai banks are facing significant challenges in transitioning from the current rules-based Anti-Money Laundering (AML) compliance systems. Meanwhile, 91% of Thai banks believe that AI will support more effective AML operations.

However, many banks remain uncertain about how to utilize advanced technology.

When asked about the effectiveness of the long-standing rules-based technology, 95% of Thai banks expressed confidence in the capabilities of these AML systems, despite 82% reporting significant difficulties in changing these systems.

"Rules-based systems remain a crucial tool for banks in the Asia-Pacific region to combat financial crime," said Timothy Choon, Director of Financial Crime for the Asia-Pacific region at FICO. "However, some banks are beginning to embrace new technologies like AI and realize that the rules-based systems in use for decades cannot keep up with increasingly complex fraud schemes.

"The secret to success lies in leveraging AI technology alongside existing rules-based systems, but in reality, 20% of survey respondents identified this as a significant barrier to achieving financial crime risk mitigation goals."

The regional survey highlights that key challenges for using traditional AML solutions include the ability to manage new types of risks across various channels and products, the capability to provide comprehensive end-to-end compliance solutions, and the agility to adapt to new regulatory changes.

The survey also revealed that large multinational banks in the Asia-Pacific region are more likely to adopt AML solutions from leading global vendors, while domestic banks tend to prefer in-house systems.

  • Strategies for Managing Financial Crime

One of the leading indicators driving changes in financial crime management strategies is customer experience. Over two-fifths of respondents ranked this as a top consideration, with 17% of banks in the Asia-Pacific identifying it as the most critical factor behind their current and future strategic approaches.

"We see that regulatory compliance and creating a positive customer experience remain priorities for most financial institutions," Choon stated. "Banks need more data to manage the numerous alerts generated by inefficient systems, but at the same time, they must avoid overwhelming customers with incessant inquiries for business reviews."

Additional factors ranked second and third by banks include reputational damage and direct financial loss. When discussing challenges related to financial crime, nearly half of respondents cited the speed of responding to new threats, while one in three believes that accurately detecting threats remains a significant challenge.

FICO's comprehensive compliance solution, FICO's comprehensive compliance solution integrates advanced machine learning techniques designed to address these challenges by significantly improving detection accuracy through patented advanced data analytics models, such as Soft Clustering Misalignment and Threat Score, enabling financial institutions to incorporate AI into their existing compliance strategies.

  • Investing in Compliance Technology

Most banks (93%) across the Asia-Pacific are likely to allocate their technology budgets towards upgrading or improving their existing compliance systems.

However, in Singapore and Hong Kong, key financial hubs in the region, only two-thirds of respondents indicated that their banks might initiate new investments in compliance technology, considering the significant spending increases in this area over the past few years.

In Thailand, 100% of banks reported that they will continue investing in compliance technology over the next year, and 41% plan to significantly increase their investments in 2021.

Overall, investment levels in compliance technology among banks in the Asia-Pacific are expected to rise in 2021, with 49% of respondents indicating they will increase their budgets, while 34% anticipate significant budget increases.

Interestingly, foreign banks are more likely to initiate new investments compared to domestic banks, with Indonesia, Australia, Thailand, and the Philippines being the markets expected to see the most investment in 2021.

"This survey, conducted in May, shows that despite the economic downturn due to the pandemic, banks remain committed to targeted investments to enhance their AML compliance effectiveness," Choon stated. "There is a growing recognition that compliance and fraud are prevalent financial crime risks, as fraudsters are increasingly likely to engage in money laundering."

"This convergence is a global trend, as banks in the United States and the United Kingdom are integrating their compliance and fraud prevention functions, including merging teams, management, and technology. We believe that banks in the Asia-Pacific will look to these markets to see if such efforts yield results and plan to follow suit rapidly in the next 24-36 months."

The Integrated AML Compliance Survey by FICO was conducted in May 2020 using an online quantitative questionnaire to gather insights from 256 senior executives from banks in 11 countries, with an independent research firm conducting the survey on behalf of FICO, covering Australia, Hong Kong, Indonesia, Malaysia, New Zealand, the Philippines, Singapore, South Korea, Taiwan, Thailand, and Vietnam.

SOURCE: www.bangkokbiznews.com