Impact of Regulatory Scrutiny & AML Compliance in Real Estate

Impact of Regulatory Scrutiny & AML Compliance in Real Estate

5 minutes read
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Anti Money Laundering (AML): Criminals around the globe are targeting real estate to launder the ill-gotten gains. The political corrupts are taking large bribes and embezzle funds from their countries and send it across the world to hide that bad money. Money is stolen from the country to which they are mean to serve. Luxurious real estate is the point of attention for money launderers through which they scramble ways and find tricks to scoop up the illegal money. This money should be cleaned before it gets enjoyed by the corrupts. 

Real Estate, a fast-growing industry is under threat of money laundering.

Many nations are united and consider it a dire need to tackle money laundering problems that are growing rapidly through real estate. With the spotlight on real estate professionals, they are strongly in the need to comply with the local regulators to deter the risks of money laundering. The real estate sector should implement measures to authenticate the customers and make sure that the are selling the property to the legitimate ones otherwise it could be problematic for them when it comes to regulatory fines. Below are some of the states that are facing issues of ill-gotten money and the absence of their records. Also, how are they combating this issue by introducing legislation?

United Kingdom: According to Transparency International, £4.4 billion of the UK’s property is bought with suspicious money. In 2018, (AML) legislation was introduced according to which foreign owners were supposed to identify themselves. The purpose of this bill was to find out who is the owner of particular money. Although this bill has not been passed yet. By 2021, the registry will be made public. The property owners who fail to comply with this registry will be imprisoned for two years and fined. 

Germany: In 2017, about €30 billion of illicit funds were funneled in German real estate. These funds have no record of ownership and how the money was generated. Germany has also introduced a transparency registry, according to which all shell structures must report the property owners with the respective property. Failing to comply with it could cost them €1 million.

Singapore: To squash illicit money transfers, Singapore Parliament has passed regulations against money laundering and terrorist financing activities. In 2017, the investors in Singapore spend $37.2 billion in overseas real estate. Not only this, but their foreign real estate investment is also increasing with the current record of about $2.3 billion. Real estate owners are required to perform Customer Due Diligence (CDD) and Enhanced due Diligence (EDD) processes to check the ownership details and verify the identities who are actually buying and selling properties. The ones who fail to comply with this will be subjected to a fine of $100,000.

Canada: Real estate of Canada needs to report Finacial Transactions and Reports Analysis Centre of Canada (FINTRAC) to report the transactions that are greater than $10,000. Not only this, they are supposed to keep a track of buyers to have a record over the legitimate customers and the malicious ones.

AML Obligations for Real Estate

Just like banks and financial institutions, real estate is equally obliged to undergo practices to combat money laundering activities. Real estate brokers, firms, real estate management companies, and insurance companies need to perform CDD to ensure that no bad actors are becoming part of their company. Also to avoid hefty regulatory penalties, casinos must carry out intensive methods to avoid suspicious money flow. 

KYC: Know Your Customer, the ever-essential mechanism to undergo customer screening with the help of supporting identity evidence. The buyers should be identified and verified using the biometric authentication process, facial verification, document verification, AML, and id verification. This can help to ensure that authentic identity is onboard with your company. 

AML Screening: Anti-money laundering and Politically Exposed Persons (PEP) background checks should be implemented within the system to screen the customers against sanction lists and exposed personalities that are not allowed officially to buy or sell any property. These checks are extremely important to keep the company away from regulatory fines and value harm. Continuous and regular AML compliance must be assured and comprehensive records should be made simultaneously.

Updated AML Records: Accuity database should be updated with the latest information regarding exposed persons and criminals around the globe. This provides firms with confident AML screening which is updated and accurate. This will reduce the risks of avoiding identities that are should be in the sanction list are not entered yet.

The momentum of AML screening is building worldwide in the real estate sector. They have recognized the need of customer monitoring and verification to comply with AML legislation. The active response should be given by the customers and sector owners in adoption of these regulations and the individuals should co-operate respectively for the healthy law enforcement in the nation. Ineffective compliance can be severe in terms of local regulatory requirements. 

Why Financial Industry Needs KYC/AML Compliance?

Why Financial Industry Needs KYC/AML Compliance?

7 minutes read
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The largest concern of financial institutions is “risk management” due to a high rate of financial crime in the industry. Financial crime takes multiple facets in different sectors of financial industry. Money laundering is one major threat and most of the financial institutions cater to it by using an online KYC/AML verification solution. 

Money laundering and terrorist financing increased at a rapid pace in recent years. Global regulatory authorities are introducing new rigid KYC/AML regulations. Financial institutions are under the strict scrutiny of global financial watchdogs. Millions of dollars of fines are imposed on financial institutions in an event of non-compliance. For instance, FINRA fined $1.1. Million to J.P. Morgan Securities for failing to report 89 potential high-risk profiles after an internal investigation of its stakeholders (employees and advisors). 

The rise of FinTech not only injected more competition into the industry but also shared the financial risk of typical financial institutions. The advent of this industry made banks and other financial institutions to enhance their operations and to introduce digital solutions for their typical financial operations to retain their clients. 

This advanced approach has pros and cons for the financial industry. Financial institutions were able to overcome the competition but also introduced new risks in their business models – the risk of online frauds and crime. 

Common Frauds in the Financial Industry

Before listing the most common frauds it is necessary to understand the motive behind these frauds committed against financial institutions. 

Clients and investors of financial institutions are the most common source of fraud and a threat to financial institutions. The major motive of these criminals is to get financial gain or to commit a financial crime in an anonymous way. Often the criminals use stolen or fake identities to execute their crime. This is the reason why all KYC/AML regulations need financial institutions to run KYC/AML verification on their clients and stakeholders before serving them. 

Common frauds with financial institutions are mentioned below:

Money laundering and terrorist financing 

Money laundering is committed to hide the money trail or black money. Financial institutions are used by criminals to launder their black money in other countries and to finance terrorist groups. Banks are not allowed to extend services to money launderers, in case the banks are found to be involved in such illegal transactions they are fined as per AML regulations. 

Account takeover fraud

Account takeover fraud is also a very common fraud in the financial industry. The criminals take over the account of a legal customer using the stolen credential (passwords, PINs,etc.) and use it for accumulating money or to make a transaction through that account. This is the reason why financial institutions are investing in biometric verification for account access.

Phishing scams

A common cyber-attack on financial institutions is phishing scam which is executed through fake emails sent to the employees of financial institutions. These scams are executed to gain illegal access to the confidential data of an organization. Employee training and firewalls is a good practice to mitigate these scams. 

Fake identities

Criminals use fake identities to open accounts at financial institutions to conduct their illegal activities. The most common victims of identity thieves are the financial institutions because they serve well the money motive of criminals. Research of Insurance Information Institue found that 3 million identities were stolen in 2018 and 1.4 million of those stolen identities were fraud-related. 50% of those identities were stolen to conduct credit card fraud with banks and businesses.

Key Points of Global KYC/AML Regulations

  • Exercise identity verification on your customers before serving them
  • Customers should be screened for international sanction lists, terrorist lists, high-risk countries and PEPs (Politically exposed people)
  • On-going AML screening of clients
  • Proper record-keeping for the AML practices in the organization
  • Any transaction above the “minimum cash transaction threshold” must be reported to the concerned authorities
  • Proper training of employees and an integrated AML compliance program
  • Fines in case of non-compliance

Recent Global trends in KYC/AML

Global financial regimes evolved in 2019. Many changes occurred in KYC and AML Verification regulations around the globe. Countries are working on extending the scope of their KYC/AML regimes. 

Canadian regulatory authority FINTRAC has changed the KYC/AML regimes to align them with international KYC/AML regulations of FATF. Online KYC is possible as scanned copies of identity documents can be used for due diligence. Also, Money Services Businesses and virtual currency businesses are added to the reporting entities list. They will be liable for typical KYC and AML rules that apply to businesses involved in fiat transfers. 

The UK amended its Money Laundering Act (MLA-2017) and require the international affiliates and subsidiaries of UK-based businesses to exercise the EU AML regulations in non-EEA countries aswell. 

Five major Dutch banks are joining forces to develop a joint technological system to handle the due diligence data of their customers. Also, they plan to develop joint KYC/AML procedures by sharing the financial data of their clients, for better KYC and AML compliance. 

Businesses that Need Real-time KYC and AML Verification Solution

As per the global AML and KYC regulations, the financial institutions must perform KYC and AML compliance. Financial institutions need to practice in-depth KYC and AML compliance. The institutions that are liable for compliance under the KYC and AML regimes are banks, brokerage houses, insurance companies, forex exchanges, non-banks mortgage lenders, money transmitters, cryptocurrency facilitators, etc. 

How Online KYC and AML verification is Performed?

The API is integrated with the system of financial institutions. Every time a new user is onboard or end-user accesses its account the verification is performed. Real-time identity verification is performed through in-depth screening of ID document and face verification or biometric verification. Also, the documents and address are verified in real-time before onboarding a new client. Once the verification is completed the end-user is allowed access to the system of the financial institution. 

Incase of AML verification the information of the end-user is screened against regularly updated databases that consist of global sanction lists, watchlists, and PEP lists.

 Benefits of Online KYC and AML Verification Solution?

Financial institutions and businesses are willing about going KYC and AML complaints after looking at the rigid behavior of global watchdogs. It is important to investigate the advantages of every step taken. 

Fraud prevention

Online KYC and AML solutions help the financial institutions in preventing the risk that comes from a diverse clientele. Identity thieves and money launderers can be identified at the very first stage and help the businesses in serving only legitimate businesses. 

Regulatory compliance

Online KYC and AML verification software help the financial institutions in catering to regulatory compliance needs. Compliance prevents penalties and credibility loss that could be huge in some cases. For example, Swedbank was recently fined for non-compliance and lost its market value along with its credit rating. 

Customer on-boarding

Online KYC and AML verification solution help the financial institutions in on-boarding clients with good credibility. Fast verification helps in seamless onboarding and helps retain more happy clients. Customers are verified within 30 seconds, reducing the hassle of manual verification. 

To wrap up KYC and AML compliance is inevitable for global financial institutions. Real-time KYC and AML verification solutions are suitable for seamless compliance. 

Global AML Regimes - Tightening Reins on Money Launderers

Global AML Regimes – Tightening Reins on Money Launderers

6 minutes read
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Money laundering is a global menace. Money laundering and terrorist financing are the major targets of global regulatory authorities like FATF, FCA, FINTRAC, FINMA, etc. Many countries like the UK, USA, and Canada are becoming more rigid in developing and implementing AML regulations on their reporting entities. It motivated businesses around the globe to invest more in advanced AML solutions to avoid any non-compliance penalties. 

Money laundering is a global crisis so, AML regimes are becoming global, through international businesses. As per the United Nations Office of Drugs and Crime estimates, the annual money laundering amount is 2% to 5% of global GDP. 

The loss does stop here but extends to the penalties that global financial institutions pay due to non-compliance. For instance, take the case of Swedbank and Danske bank that paid millions of dollars in penalties due to money laundering practiced in their Estonian branches. 

Both the banks were ignorant of their AML compliance and suffered huge losses due to these cases. The scandal wiped €7 billion off Swedbank’s market value and took a toll over its credit rating. As for Danske bank, it closed its Estonia branch as per the regulatory requirement. 

These shocking revelations affected the AML regulations, regulatory authorities are even more rigid towards AML compliance. Also, the financial institutions and businesses are paying more heed towards AML compliance due to rapid changes in global AML regimes.

Dutch Banks Joining Forces Against Money Launderers

Dutch banks have been exploited several times by the money launderers in the previous years. The largest Dutch bank paid $858 million to settle an investigation last year. It was the largest fine in Dutch corporate history. 

In order to mitigate the risk of further damage, five Dutch banks are exploring joint monitoring of transactions. The banks are aware of the technical and regulatory roadblocks that will hinder this collaboration because confidential data of clients will be shared among the collaborating banks. 

A group of Nordic banks, including Danske bank, are planning to establish a joint venture to develop a platform for handling due-diligence data of their customers. Also, they are working on developing complex algorithms to identify illegal fund transfers. 

The USA Expanding its Counter-Terrorism Powers to Hinder Terrorist Financing

The USA is also expanding its counter-terrorism powers to fight terrorist groups and money launderers. The Wall Street Journal, 11th Sept 2019, reported that Trump administration is expanding its counter-terrorism powers to a global level. The USA will target the international financial institutions that will assist the U.S.-designated terrorist groups and their affiliates. Also, it imposed sanctions on several individuals and entities involved in terrorist groups. 

In its wake to improve security in the state, the U.S. Treasury imposed sanctions on three Korean groups namely, Lazarus Group, Bluenoroff, and Andriel involved primarily in global cyberattacks on financial institutions and ransomware attacks. It is found that these groups are directly controlled by North Korea’s primary intelligence bureau, RGB. These measures are taken to reduce money laundering and terrorist financing in the USA. 

The UK MLA-2017 Amendments of 2019

The UK announced new regulations in AML group-wide policies of the Money Laundering Act (MLA-2017). These new regulations will be in action from 3 Sept. 2019 and will extend the scope of EU regulations to other states. The reporting entities will have to extend necessary EU AML practices to non-EEA states where they have local entities. 

The businesses are entitled to review the regulatory framework of AML/CFT regulations in other states. In case they are facing any hindrance from the authorities in other countries they must report to the FCA(Financial Services Authority) within 28 calendar days of the concerned country. 

If there are restrictions in practicing EU AML regulations in non-EEA states the businesses must take additional measures to mitigate the risk. In case additional measures are not fruitful the businesses are directed to terminate some or all of their operations in that country to mitigate the risk. These new regulations will change the overall AML compliance practices of the businesses.  

Canada – Amendments in PCMLTFA

The Canadian government amended the regulations of the Proceeds of Crime Money Laundering and Terrorist Financing Act (PCMLTFA). FINTRAC (Financial Transactions and Report Analysis Center) will implement new AML regulations. 

The major amendment in AML regulations is that the reporting entities are allowed to accept photocopies or scanned copies of identity documents for verification of the clients. In the past, only physical documents were allowed for verification of clients. 

Now the financial institutions and businesses can use identity and document verification software for due diligence. It will enhance the accuracy of their AML compliance practices. Also, online verification is less costly and time-efficient. 

The new Canadian regulations are designed to align the AML regulations of Canada with global AML regulations of FATF (Financial Action Task Force). Money Services Businesses (MSBs) are included in the Reporting entities (RE) list. 

The MSBs will have to follow the same AML regulations of due diligence, recording, and reporting just like the typical financial institutions. Financial institutions will not be allowed to conduct business with unregulated MSBs. The MSBs will have to run in-depth identity verification on all their clients. 

Virtual currency businesses will be registered just as MSBs and will have to follow rigid AML regulations. They are directed to report any cryptocurrency transaction above minimum transaction threshold of $10,000. 

The reporting time for MSBs and virtual currency businesses is also reduced to 3 days from 30 days, which is the global criteria.  

What Businesses Need to do About These Changes?

Global businesses will be affected by these changes. The businesses will have to rethink their AML practices. As most of the AML regimes require the verification of global clients so it is necessary to use feasible solutions for frictionless compliance. Manual compliance could only be helpful when the clients are local. 

Real-time AML compliance solutions will help financial institutions to mitigate the risk coming from international clients especially when the clients are from high-risk countries. Its high time to make smart decisions to stay one step ahead of fraudsters in the future. 

Enhanced Due Diligence: Ensuring KYC and Regulatory Scrutiny

Enhanced Due Diligence: Ensuring KYC and Regulatory Scrutiny

7 minutes read
116

Enhanced Due Diligence: The adoption of innovative solutions in businesses today, should not have the sole purpose of making profits. A broader vision is required that could abstractly look into the secondary dependencies that can impact a business. These dependencies vary from the third-party services and businesses to associated regulations and compliance requirements. Instead of limiting the focus on business revenue generation, knowledge of local regulations and guidelines should also be ensured. 

Customer identification and verification become a crucial step for businesses to meet the Know Your Customer (KYC) guidelines. While partnering with third parties and businesses, especially the financial institutions and banking industry who has a lot to deal with multiple other industries should ultimately comply with the need of knowing them fully. This serves as the primary step to curb the risks of harsh penalties and local regulatory fines.

A recent study shows that In the EU, regulatory fines can reach up to €20 million. This could be estimated to be 4% of the business annual revenue. Per violation, it costs about $1,000,000 in countries like Australia and Brazil. KYC compliance is the step that can deter the risks of such huge monetary loss. The banks when open new accounts for users need to conduct the Customer Due Diligence (CDD) process. This process ensures the identity of the user under certain KYC parametres. It includes the Anti-money Laundering (AML) background checks, terrorist financing, and checks for Politically Exposed People (PEPs) to ensure that any forbidden entity does not dare to be the part of the legitimate business.

Enhanced Due Diligence (EDD) is an advanced concept of CDD, the security perspectives and guidelines that are CDD do not cover are wrapped up by EDD. It ensures a high-level security potential that could impact the business directly or indirectly. The hidden security challenges, identity assurance, risk assessments, and evaluation are part of EDD. The high-risk privacy and security concerns are eliminated with EDD compliance at an organizational level. The monitoring and screening of entities and transactions reduce the chances of online fraud and payment scams. Also, introduce soundness and reliability in the business.

The intersection of Enhanced Due Diligence and KYC

EDD and KYC both fulfill the purpose of customer authentication. EDD policies intersect with KYC ensuring the rigorous onboarding process for the end-users. The data should be collected, examined and processed with responsibility and detailed auditing should be performed to keep track of the activities been performed in the system. Controlled data access should be done in order to limit the number of users accessing sensitive user data. In this way, there will be fewer chances of integrity interruption within the data. EDD requirements also assure KYC risks associated with each verification process, with individual risks calculation and assurance before further processing. Also, Identities should be verified against money laundering and counterterrorism checks that make sure the honest traffic on board. 

Under the hood of local regulatory compliances, EDD ensures the data privacy and protection rights associated with the user. User data privacy rights include the intentions for which data are collected, analyzed and processed. The time span to which data will be saved in the database and the tasks in which data will be used is also answered. The organizations that fail to comply with these laws are subjected to heavy lawsuits.

Regulatory Penalties Around the World

The comparison of data protection regulations around the globe is done, among which it is discovered that about 65% of countries have made amendments into their policies or have adopted the GDPR requirements when it was announced. Penalties can be demonstrated on the basis of local regulatory compliance by the countries and how they see it. This alignment of lawsuits can extend in case of non-compliance accordingly. The fines are not only applicable to the ones who undergo some cyberattack or data breach but it doles out to each individual business who does not comply with local regulators. Below are some of the countries and companies who are recently fined:

Germany: first fine Germany faced back in July 2018. A German social media network named Knuddles got hacked which compromised the information of more than 330,000 users which includes 808,000 email addresses and relevant passwords. The reason, this information got hacked was that Knuddles has stored the user information in plain text which is entirely against the GDPR law. The company this breach in September and blocked all the affected user accounts and informed those users. Due to this data breach, Knuddles was subjected to a small fine of €20,000, which was under debate by many people. Although local regulators find it totally proportional to the loss the company has made due to data breach. After this, the company put strong security measures to protect their system from similar and further incidents of a data breach.

Poland: Poland’s DPA subjected to a fine of €220,000 on April 1, 2019. A digital marketing agency, Bisnode failed to dole up with the requirements of GDPR. Bisnode scraps the data and process it, but without notifying the data subjects, which leads them to a heavy fine. As it is the GDPR law, that without the permission of subjects, user data cannot be used. Additionally, Bisnode was supposed to mail 6 million people in the next three months which cost them an extra €8 million. If this company has notified its end-users previously could avoid this heavy risk. 

Google: In January 2019, Google subjected to a heavy fine of €50 million. The violation of the requirements of GDPR was taken in notice when data subjects complaint about the inappropriate method of Google for asking consent from them. The lack of transparency is one of the key points of GDPR which was not fulfilled. According to GDPR, consent should be freely given, must be informed, must be granular and should involve affirmative action. But, Google failed to comply with all these specifications as the boxes for consent were pre-ticked which is not considered as valid consent.

How Enhanced Due Diligence help avoid Penalties?

One of the major challenges with EDD is to know how much information is required from a customer to verify the identity. Electronic checks are implemented by financial institutions that automate the tasks of verifying identities against money laundering and terrorist financing. These tasks are audited automatically which keeps the track of entities entering and leaving the system while screening them against multiple checks. Their activities are constantly monitored to avoid the chances of malicious actors being part of the system.

Online Identity Verification

Verify the onboarding customers using a bunch of necessary information which includes personal information i.e. name, date of birth, address, age, etc. (varies with the niche of businesses accordingly). This can reduce the risks of online fraud that take place every now and then with multiple faces.

Avoid Financial Crime

With EDD, dirty money can be prevented which includes the money from PEPs, terrorists, and money launderers. The necessary security precautions are covered by EDD due to which soundness and transparency in the system are ensured that deters the risks of financial crimes.

Clear Compliance Details

The compliance details of the company should be obvious. It is not necessary that a data breach explicitly shows how secure your software is, but the key step is complying with local regulators and privacy programs. In the business’ policies, all the compliant documentation should clearly mention the laws that are required by your specific business niche.

Artificial Intelligence - What is it and Why it Matters

Artificial Intelligence – What is it and Why it Matters

7 minutes read
162

Artificial intelligence (AI) emphasizes the creation of intelligent machines that work and react like humans. Artificial intelligence uses machine learning to work like human intelligence. The computer has to learn how to respond to certain actions, so it uses algorithms and historical data to make predictions.

Machine learning is one of the most important AI technology. This technology allows the machine to work on a certain algorithm of learning without explicitly giving them defined instructions. The machine learning AI-based program is designed for decision making with the ability to recognize the relations with available data. 

AI Taking over the world?

A person’s view of AI taking over the world is merely a misconception. Do you think that AI can challenge the human brain, his way of thinking and behaviors and surpass human intelligence gaining the title of “Super-intelligence?” It is not as simple as it seems right? A machine designed by humans is replacing Human..seems ridiculous right? Just because of the invention of some wonderful technology which leaves humanly astonished, causes an unknown fear in their minds.

Artificial Intelligence is just a technology that is used to ease the humans. But if people start thinking that this miraculous technology will take over the world replacing humans then it would be wrong. Because no matter how intelligent the machine is, it can never surpass the abilities of the human brain.

Why People Should Embrace And Not Fear Artificial Intelligence?

As new advancements in any technology are usual to go mainstream, the public in the majority often reacts with a degree of mistrust and fear. That’s probably because with each step technology takes forward, humanity usually has to deal with some growing pains. Even advancements that we now take for granted completely shook the world when they first came on screen. So is the case with Artificial intelligence which is just the latest form of technology getting a lot of fear and pushbacks.

Tesla and SpaceX chief executive Elon Musk has pushed for the proactive regulation of artificial intelligence because “by the time we are reactive in AI regulation, it’s too late”.He has been calling for “strict regulations of technology”. There’s a lot of fear surrounding artificial intelligence these days. Well, we all know about the saying “nothing is good or bad, its use makes it so” so what we need is a clearer understanding of the issues: what AI can do, and, more pressingly, what it can’t. Reasons Why AI is nothing to be afraid of:

  • AI does not know everything!

We have gone overboard with the unrealistic portrayal of AI robots and supercomputers thanks to Hollywood movies and sci-fi novels. These kinds of ‘take over the world and think independently of thy human creator’ AI programs simply don’t exist!

Humans have yet to invent an all-in-one AI design capable of performing an infinite number of tasks and learning at a geometric rate. What you’ll find instead is a growing number of AI designs that can perform very specific tasks very and are unable to “think” independently.

  • AI creates new jobs!

Whilst AI could potentially replace some jobs, it’s also true that AI has led to the creation of many jobs as well. For instance, smartphones combined with Uber’s AI technology have created driving jobs for just about anyone with a car.

It can be difficult to predict which jobs will be created, but it will absolutely happen. If nothing more humans will still be needed to double-check AI’s work.

  • It makes for a better consumer experience:

Thanks to its data processing expertise, AI can analyze a user’s behavior and respond accordingly to help them make purchases according to their needs and wants, creating a better online experience for the buyer and more money in the pocket of the business.

  • AI is not Handled by any single person:

There is no single government entity, military leader or evil CEO that can push a button and command AI to harm mankind. In fact, AI isn’t in the hands of a few people but instead is integrated across the globe and is in the hands of more than a million people in thousands of different forms.

  • It encourages more human interaction:

AI is assigned to repetitive tasks so that humans are free to do things that machines aren’t good at, such as interacting with other humans. AI can’t replace a doctor consoling an ill man or a startup CEO conducting dozens of interviews, but it can free up everyone’s schedules a bit. times. It saves people’s lives when people can’t save people’s lives by helping doctors by the diagnosis of disease does that they can provide the relevant course of treatment.

Wonders of Artificial Intelligence In Every Sector:

Artificial Intelligence products are an innovative breakthrough that paved the way for businesses with the potential to boost rates of profitability. The number of artificial intelligence startups has been exponentially growing from the last few years. It has been employed immensely in business for creating smart applications. AI-based products make work easy and somewhat more reliable. The following are the few mind-boggling AI applications from various sectors:

Healthcare

When used in healthcare, AI practically changes the way patients are being treated. Artificial intelligence simplifies the lives of patients, doctors, and hospital administrators by performing tasks that are typically done by humans, but in less time and at a fraction of the cost. No one can dispute the power of MRI, X-ray machines, and CT scanners. AI-supported scanners can delve much deeper into the patient’s body, thus creating perfectly accurate images that reveal the presence or absence of illness. AI is already able to detect skin cancer more accurately than dermatology experts. AI-based apps can successfully track and evaluate user behavior, thus discovering the first signs of mood swings and depressive behavior, for Instance, BioBeats. Robot doctors are gradually taking over the surgery scene by making surgeries cleaner and more precise. Moreover, drug designing is becoming effective and less expensive by computational methods. So AI is verily enhancing the healthcare sector.

E-Commerce

These days we are doing everything on the internet for almost everything. From online shopping to online ooking everything is being done via the internet. Online merchants need to worry no more as AI-based products have eased online business. These days Virtual assistants have grown to be a very common technology. Chatbots emphasize the value of human interactions and connection. Chatbots replaces forms with A.I. Instead of traditional marketing and sales platforms that rely on forms and follow-ups, it connects business with the best leads in real-time, like a virtual assistant for your website. Likewise, automated social media marketing tools are used. These tools perform automated publishing, add identity trending content, publish new posts automatically, etc. Companies can increase their efficiency on social media sites by automated tools that take much of the legwork out of this type of marketing, freeing staff members up for other campaigns, bringing up more profits to the business.

Financial Institutes

Since mobile banking is increasing so are digital scams clamping up. It is very important for financial institutes to know who they are dealing with. Thanks to AI Digital identity verification service are here which are used by banks or financial institutes to ensure that users or customers provide information that is associated with the identity of a real person. It decreases the time required for authentication of the ID of a person and streamlines the process. These products ensure security, deter frauds and decrease digital scams.

Biometric Identification is On the Rise in Education Sector

Biometric Identification is On the Rise in Education Sector

6 minutes read
194

An acceptable method of identification i.e. biometric technology is hitting the education industry with remarkable applications and solutions. Specifically, fingerprint scanning is one of the most used verification methods among biometric Identification adopted worldwide. It is a faster, better and cost-effective solution deployed for school administrators to keep track of students’ presence, accurate student records and to provide students, teachers, and staff with a secure environment. From corporate training to evaluation to identity verification during employee assessment, academic integrity is getting leveraged with the biometric back.

Biometrics Identification in the United States education sector is expected to mark $70 million by the end of 2019. From 2015, this growth rate is about 30%. This technology has paved the way for digital learning and has now become an indispensable priority for educators. Classes were restricted to lectures, physical objects and talks prior to the advanced era. Now, both teachers and students have a digital toolbox that ranges from engaging devices to the e-learning education market. Digital education is expected to surpass $243 billion by 2022. This fast-growing digitization is showing the willingness for the adoption of biometric technology in the educational sectors globally.

Biometric technology authenticated identity based on biological and physical traits. Not only limited to fingerprints but iris and retina scanning, facial recognition, voice and gesture verification, and hand geometry also involve in it. With a bunch of applications and capabilities, biometrics are becoming a useful tool for effective learning and maintaining academic integrity. Beyond this, it serves a solution for a significantly secure environment for the educational community. Registrars are using advanced biometric technology to authenticate the identities of students and staff upon enrollment.

How does it Work?

The biometric Identification system is successfully used in numerous applications. The unique biological traits serve as a verification solution for multiple sectors. The education industry is the one that is adopting this technology rapidly. Talking about fingerprint scanning, it includes a series of furrows and ridges on the finger’s surface. The unique pattern is identified and verified against the database that previously holds the fingerprint information. The sensors capture the fingerprint and unique identifying points of the surface of the finger and collect maximum information from those points. In facial recognition technology, facial features are captured by the camera and are matched with the ones in the database, if both images match, a status of verified is given otherwise it is rejected. Similar goes for iris and retina scanning. The unique iris traits for each person make biometric technology an innovative solution to deploy at an industrial level. 

Multi-factor Authentication 

A secure sign-on game can be upped with a multi-factor authentication system. Especially for the online educational portals where online registration can be ensured using multimodal biometrics. It uses a combination of two or more biological traits to verify the identity of users. A serious line of defense to allow authenticated users to be part of the system. 

Practical Applications in Education Sector

 

  • Biometric Identification Academic Integrity

 

Online learning platforms can utilize the fantasy of biometric technology to verify the identity of learners online. Using facial recognition technology, identities can be verified using webcams. Also, it can be used to deter cheating during online assessments and examinations. Also, this results in an efficient method of using this technology to make it more accessible and user-friendly and allows us to verify them in real-time. During online tests, identity can be stored using biometric verification and then can be used within the tests several times to make sure that the same person is appearing throughout the test. 

 

  • Controlled School Access

 

The access to the school should only be permitted to the ones who belong to it. Unauthorized access can harm the school’s environment directly or indirectly. The students, teachers and other staff including visitors should be authenticated through a biometric authentication system. An accurate time-stamped will result in an accurate database holding all the arrival and departure information. This checked-in solution can maintain an irrefutable record including the date and time along with the id or name of the person. This makes sure only authorized community to be part of a legitimate organization.

 

  • Attendance System

 

For online course attendance, to ensure the integrity system owner can perform biometric verification online. This helps instructors to know about the students who are taking an online course are the ones who they say they are. Before registration the biometrics are stored that can be checked regularly before every class. 

School administrators are accountable before the state and federal governments provide funds to the university based on the number of students and their attendance. The ones who do not folow the guidelines of government are subjected to fines or are supposed to give them hundreds of dollars back. Here biometric technology plays its role, biometric attendance can ensure the real-time and quick attendance of students before. This can be done online using mobile applications in a class saving valuable time from the period.

 

  • Library Account Registration and Books Issuance

 

In school libraries, students store their valuable academic assets such as books, notes, periodicals, documents, pieces of art and similar stuff. It could be a headache to verify the belongings of each student and keeping a record of the students who are entering or leaving the library. Librarians can install a system based on biometric verification, where students can have their online portals which are authenticated using biometric technology and the same biometric verification trait can be used in library itself to authenticate the online student and student demanding belongings physically. Also, to ensure the book issuance data, biometric verification can be used against certain identities of student to keep it in a library record.

 

  • Biometric Identification For Online Book Stores

 

Online e-book stores can use a biometric verification system to authenticate the identities online at the time of registration or while entering credit card information for payment processing. This will reduce the risks of credit card fraud as in real-time identity can be verified which makes sure that transaction is performed by the real identity. Online stores are more prone to credit card fraud and online payment scams. Biometric technology can mitigate these risks allowing only honest traffic to be part of the system and making transactions.

In the education industry, biometrics can be induced to solve the myriad of problems encountered by the schools and online learning platforms. The accurate, auditable and cost-effective authentication mechanism, biometric verification can be used to introduced reliability and soundness in the schooling systems. Real-time biometric verification will also ensure an efficient security measure against several frauds while providing a better user experience at the same time.

Impact of Canada’s Evolving AML Regimes on Your Business

Impact of Canada’s Evolving AML Regimes on Your Business

5 minutes read
335

Canada’s AML regulations changed a lot in 2019. More rigid AML regulations are imposed on all types of businesses to reduce money laundering and terrorist financing in Canada. These new regulations will enhance the due diligence practices of companies as digital customer onboarding is allowed to the businesses. 

The government of Canada amended the regulations of Proceeds of Crime Money Laundering and Terrorist Financing Act (PCMLTFA). FINTRAC (Financial Transactions and Report Analysis Center) will be implementing the new AML regulations. 

FINTRAC is an independent federal body in Canada that is responsible for collecting and analyzing the information to detect and prevent money laundering and terrorist financing in Canada. 

The new Regulations are designed to align the Anti Money Laundering (AML) and terrorist financing regulations with the international regulations of FATF (Financial Action Task Force). 

The amendments were introduced in June 2019 after the analysis of the 2016 report by FATF. The report stated that Canada has been the hub of money laundering, real estate, and other industries that are used to launder money to and from Canada. 

Not only that the Mauren Maloney’s report on moany laundering in Canada also highlighted that money laundering is not limited to a few states of Canada. The report estimated that a total of $46.7 billion were laundered through Canada’s economy last year. While British Columbia was responsible for roughly $7.4 billion. 

Based on such shocking facts, Canadian regulatory bodies are keen to control money laundering in Canada, as it is expected that these revelations might be the tip of an iceberg. The latest amendments are designed to bridge the loopholes in digital financial operations and to regulate the unregulated domestic and international entities. 

Key initiatives proposed by the new regulations are as follows:

Digital KYC is possible

Reporting Entities (REs) will be allowed to accept photocopies or scanned copies of identity documents for performing due diligence. In the past, physical documents were required for identity verification of the customers. Customers were required to visit brick and mortar outlets of banks and other financial institutions to register. 

Now that scanned copies of documents are also considered legal, businesses can utilize digital customer onboarding software to onboard clients fastly. Clients can be verified online within a few minutes. It will reduce the hassle of manual customer verification software. This new amendment will improve the customer value of banks and will prevent risk as online identity verification & AML software provide high precision in results. 

Regulation of Money Services Businesses (MSBs)

Money Services Businesses that provided online services are the loophole, exploited by money launderers and terrorist financiers. The latest amendments have addressed this security concern. 

Domestic as well as foreign MSBs will have to follow the same due diligence, recording and reporting regulations. The new regulations will enable FINTRAC to levy administrative monetary penalties on foreign MSBs and will lead to cancellation of their FINTRAC registration if not paid. 

Also, financial institutions within Canada will not be allowed to do business with unregistered MSBs. So, it will tighten the reigns on money launderers and will help financial regulatory authorities to improve the credibility of Canada among other states.

The international MSB’s dealing in Canada will need to run Identity verification on their clients to fulfill the regulations otherwise FINTRAC holds the right to charge financial penalties. 

Virtual Currency Businesses

Virtual currency businesses will be added to PCMLTFA regulations. Virtual currency exchanges and value transfer services would be regulated as MSBs. They will be liable for AML, reporting and record-keeping regulations as well. Also, the virtual currency businesses will have to report any transaction above $10,000. 

Prepaid Access Products will be added to the REs (Reporting Entities) that offer bank accounts. The Prepaid access products providers will have to verify the identity of clients, keep records and report suspicious transactions. All the rules that apply to REs that offer bank accounts will be applied to prepaid access products. 

AML Reporting standards

Previously the financial sector was obliged to report suspicious transactions within 30 days. Now FINTRAC aims at aligning its regulations with international regulations of FATF, reporting must be practiced within 3 days of a suspicious transaction. 

What businesses need to do about these amendments?

With changes in PCMLTFA regulations, businesses will have to change their AML compliance practices aswell. Digital KYC and AML solutions will help them in complete compliance as international MSBs working in Canada will also be required to perform AML on their clients. 

Internet-based businesses especially the virtual currency businesses will have to follow the international due diligence, recording and reporting regulations. All these regulations will not only impact the AML compliance practices of businesses and financial institutions but will enhance their risk cover against money launderers and terrorist financiers. 

Digital KYC and AML software are feasible solutions to keep up with new AML regulations. It provides high precision results within a minute. And runs continuous checks on high-risk clients, reducing the compliance hassle of banks and businesses.

Identity theft

Identity Theft – One Fraud Multiple Facets

7 minutes read
514

Identity theft is a global crime. All types of identities, including the financial, medical and business identities of common people and business executives are stolen and exploited to defraud businesses and institutions. 

As per the Federal Trade Commission’s (FTC) 2019 report, 1.4 million identity theft fraud reports were processed. A total of $1.48 billion were lost in those frauds. The most common frauds that surfaced were imposter scams, credit card fraud and debt collection through stolen identity scams.  

Symantec’s internet security threat report stated that account takeover fraud rose by 79% and new account fraud rose by 13% in 2018 as compared to 2017. 

These fraud reports are raising unease among the business circles and they are very keen to find an ultimate solution to eliminate these frauds. One of the most common counter fraud techniques employed by businesses globally is real-time identity verification of the stakeholders of an entity. It provides a risk cover while enhancing the compliance and customer onboarding procedures of the company. 

A 2018 survey of identity-theft-related crimes in the UK based banks revealed that banks are using enhanced due diligence tools (online identity verification, and AML compliance tools) to mitigate the risk of identity fraud with them.

Industries targeted by identity thieves 

Contrary to the common notion, all types of businesses are targeted by identity thieves. Whether it is a financial institution or a non-profit organization, all industries are the targets of identity-theft-related fraud. 

Every business has a unique business model, but fraudsters do find a way to invade the protocols using a stolen identity. The following discussion will provide an insight into how a stolen or fake identity can take different facets to defraud several businesses. 

Financial industry

Key motive behind fraud is monetary gain. So, fraudsters commonly target financial institutions. And most common frauds conducted with a stolen identity are credit card fraud, account takeover fraud, money laundering, mortgage fraud, and wire transfer fraud, etc. 

Insurance institutions, mortgage houses, banks, stock exchanges, investment companies, etc. are the common victims of these frauds. 

A 2018 survey of Insurance Information Institute(III) of the USA revealed in its 2018 survey that 3 million identities were stolen in the USA alone and more than 50% of those identities were used to defraud businesses. 

Fintech

Fintech is growing at a rapid pace. Fintech startups raised more than $16.4 billion in VC/PE investments. The growth potential of fintech is huge, so is the risk involved in this industry. Technological solutions used to transform the traditional financial processes have left some loopholes for cybercriminals. 

Common frauds in fintech using stolen identities are money laundering, payment frauds, illegal funds transfer, etc. 

Online payment solutions, cryptocurrency exchanges, online mortgage, and rental service providers, etc are common victims of these frauds. 

One instance of fraud in fintech using the fake identity is when inmates in Florida county jail laundered $8000 through bitcoin. The inmates bought fake identities and credit card credentials through the dark web and used them to buy bitcoins. Once the bitcoin was purchased they converted it into fiat and transferred it into mysterious accounts outside the jail. The jail authorities found about this crime when they investigated a certain pattern of fund transfer, from the accounts of inmates. 

If the cryptocurrency exchange would have conducted identity verification before selling the bitcoin, the fraud could have been traced at the very first stage, because the criminals were using stolen identities and credit card credentials to make transactions. 

Healthcare

The healthcare industry is considered a pure industry, free of any fraud. Contrary to the common belief, cybercriminals are posing a threat towards the healthcare sector as well. They target patients, hospitals and other healthcare institutions, equally.

Common fraud in the healthcare sector are getting free medical services and buying prescription drugs using a patient’s identity. These frauds affect the credibility of the healthcare institutions and their doctors. 

1.3 million child identities are stolen every year and these identities are often used to defraud the hospitals. For example, a teenager in the USA was not allowed to donate blood on the basis that she was treated for HIV in the past. When investigated it was found that the identity of that girl was used to defraud a hospital in some other state to get an HIV treatment. The hospital did not verify it’s patient’s identity and gave a clean chit to a person with HIV. 

In another instance, the woman’s identity was used to get free treatment and her medical credentials were manipulated. When the real patient went for heart surgery, doctors cross-checked her medical credentials and found that the data was manipulated. In case the medical credentials would not have been checked the woman might have lost her life. Because the major credentials of her height and age were changed, that is used by doctors to decide medication dose for a patient. 

Such frauds are often conducted with the intention to get free services or prescription drugs but it can affect the credibility of a hospital.  

Education sector

Education is no more limited to brick and mortar schools and universities. Educational institutions are onboarding students online and are providing online courses. Other than the institutions, many online platforms are offering free as well as paid courses and material to the students. 

Commonly the stolen identities are used to imitate a credible students to get free education services. Also, online educational institutions are defrauded to get access to free study material for selling it to other websites.

In case a website is exploited to get a copy of content protected with copyrights, that website will be deemed responsible for the loss of the original owner of the content (books, research papers, etc). Because only a few credible sites are allowed to give access to the books and notes that have copyrights. 

The website loses its credibility if the identity of a student enrolled in an online course is used by an identity thief to attend online courses. Educational institutions and online educational platforms also need to perform due diligence on their participants to mitigate the risk of serving an identity thief. 

Travel/hospitality industry

The travel and hospitality industry caters to a wide range of clientele, so their risk is high. The common frauds that occur in the travel and hospitality industry are, imitating a guest to get free services or travel free of cost. Also, the criminals at large use stolen identities to use the hotel as their hideout. 

The travel industry is exploited by criminals for human trafficking, drug and money laundering. For instance, human traffickers use fake identities to fool the airport authorities to deliver underage children to other states for child labor. 

The above-discussed industries are just a few examples of the risk that stolen identities pose towards several industries. Other common victims that have been highlighted in the news are the e-commerce industry, real estate industry, government institutions, etc. 

How Identity verification is the savior of multiple industries?

Frauds related to identity theft are the risk for several industries. One stolen identity can be used in multiple ways to defraud businesses. Real-time identity verification can identify an individual within a minute.

Identity verification is a feasible and cost-effective solution to mitigate the risk that identity thieves pose towards a business. 

Real-time identity verification not only provide businesses with a risk cover but also helps them in seamless KYC and AML compliance and improves their customer trust. Customers feel more comfortable and secure with companies that run due diligence on their clients without any long delays. Also, it increases the credibility of an organization and prevents any penalties due to non-compliance.

AML

“Brexit” Greasing the Wheel of Money Laundering

4 minutes read
484

Brexit is in the global news for many years. The reason is that several countries have their stake in it. But the UK will be the one exposed to a huge threat of money laundering. As its regulations regarding Anti Money Laundering are in the pipeline, the businesses in the UK are exposed to money launderers hidden behind shell companies. The predictions infer that UK-based businesses are in dire need of effective AML solutions to mitigate the risk coming from global criminals especially from Russian and Italian mafia.   

The UK’s defense against money launderers will be weak as it will be isolated from its neighboring countries. It will have to develop its own regulations, generate new connections and agreements with other states for regional wellness. This whole process will take time and the money launderers will leverage on it. Currently, the UK is part of Europol, which is mainly involved in Anti Money Laundering efforts. But the overall defense of the UK against money launderers will become weak after leaving the European Union (EU).  

Nicola Gratteri a public prosecutor in Calabria predicted that Brexit might aid the Italian mafia in pooling in their illegal money to the UK. Shell companies will be the safe haven of criminals to legitimize their cash proceeds from drug dealing, human trafficking, etc. 

UK-based businesses and financial institutions are mainly exposed to this risk. The new regulations might transform their AML compliance practices. An increase in shell companies will increase the risk in both B2B and B2C relations. 

These predictions are not only based on speculation, but also on the analysis of past incidents. The Guardian revealed a few years back that $20 billion were moved out of Russia during a 4 year period from 2010. Due to cold relationships with Russia, the UK authorities were unable to trace the real culprits behind the huge money laundering incident. 

A few years back, Organized Crime and Corruption Reporting Project (OCCRP) collected the data of thousands of bank transactions from secret sources and revealed shocking facts about money laundering. It shared the data of 20,000 bank transactions with the news and other agencies. The data showed that 1920 transactions took place in the UK and UK registered firms and banks were used in those transactions. 

Who is exposed to the risk?

Brexit has attracted international investors to invest in the UK, as well as criminals. The UK banks and B2B companies are exposed to a huge risk of money launderers hidden behind shell companies. 

Banks

Banks need to pay heed towards their AML protocols. The screening of UBOs (Ultimate Beneficiary owners) is crucial. They need to watch over their individual consumers as well. Because money launderers use layman on the front end to hide their original identity. For example, a 2012 report on an organized criminal group “Ndrangheta” revealed that a Brazillian woman living in the UK was also involved in facilitating money laundering for the Italian mafia. 

The banks in the UK need to keep an eye on the transaction of their individual clients as well. Do not ignore any unusual transactions of the old clients as well. 

Businesses

Businesses are also exposed to risk. The risk comes to the businesses from several sources, clients and merchants are the most vulnerable corners. Merchants might be money launderers or terrorist financiers. The fake merchants manipulate the business proceeds and integrate the black money within. Once those money launderers are caught, their connection with a legitimate business will tarnish the credibility of that business. 

On the other hand, the clients are also a huge risk, businesses are bound to exercise Anti Money Laundering compliance on their clients. Due to huge risk, the regulatory authorities will keenly scrutinize the businesses and the chances of huge penalties are high. 

Running online identity verification on the merchants and clients will help legitimate businesses to prevent the risk of serving money launderers. Also, it will help to build trustworthy relationships with clients and merchants in the environment of uncertainty. 

To wrap up, once the UK leaves the EU the risk for the businesses and financial institutions will increase. They will have to tighten their KYC and AML practices to prevent monetary and credibility loss. 

Fintech Trends - Unlocking the Unmapped Potential

Fintech Trends – Unlocking the Unmapped Potential

6 minutes read
604

Fintech, a blend of two words Finance and Technology, represents the collision of two worlds that how technology is revolutionizing the finance world. This industry has significantly evolved over the past few years. According to The Fintech Ecosystems report, it has reached to a new height in 2018 hitting the market value of $32.6 billion.

The investors are already in the race of reaching to the top by overcoming the gap between technology, incumbents, and ever-growing customer expectations and demands. They are continuously launching new products and services to diversify technology scores, eventually earning tremendous investments. Several studies and researches are being conducted to analyze the upcoming potentials associated with financial technology and how it would reshape the landscape. 

4 Segments of Fintech

Finance and technology are firmly gripping each other to come up with a strong market presence. The aggregate investment figures reported in 2018, encompasse different patterns of developments. The financial technology industry covers a range of industry models operating in different niches, segmented into four distinct variants. 

  • As new Entrants

Financial technology start-ups look forward to adopting the latest technologies and approaches to enter financial services. Such firms target a particular niche or product with an intent to develop an economic model similar to banks’.

  • As Incumbent Financial Institutions

These institutes significantly invest in technology to improve their performance, user experience, and meeting hostile threats. Moreover, the aim of these institutions is to capture competitive partnership and investment opportunities.

  • As Ecosystems

Financial Technology as ecosystems systemized by developed and large-scale companies offer financial services not just to enhance the existing platforms but also to monetize current user data and relationships. For example, “AliPay” supports Alibaba’s e-commerce platform. Leveraging robust user-engagement, such financial technology organizations offer relatively less customer acquisition cost as compared to other firms.

  • As Infrastructure Providers

These institutes offer/sell services to other financial institutions for digitizing their technology stacks and risk management and improving customer experience. 

Challenges for Fintech Variants

The future holds something big for these financial technology variants and of course, the hurdles are going to be there to reach their ultimate goals. For example, currently analyzing the market, the success of the infrastructure providers depends on the product and technical capabilities. Whereas, customer-oriented startups firmly focus on customer acquisition costs.

For Incumbents, the most challenging part is related to organizational skills and practice just like investing in technology. Convincing an employee, comfortable with traditional methods, to shift to digital can be agonizingly slow. The established technology businesses trying to enter the financial technology ecosystem may face regulatory challenges (KYC and AML compliance etc.). Unlike the advertising industries, the financial industries are quite timorous in adopting the “move fast and break things” approach. which makes them conscious about developing such integrated financial services.

Global Financial Technology Trends

Cloud-Based Solution to Settle the Fintech Market

Cloud computing is now helping financial institutions like banks to digitize their operations and become more accessible to customers, eventually reducing overhead costs. The main advantage is that it eliminates the need for specific and dedicated hardware and software and other resources required to maintain it, overcoming investment costs. As per the study, the cloud-based solutions are all set to lay foundations for how banks and other financial institutes are going to manage, conduct and grow their business in the future.

The organizations are now integrating and using cloud-based SaaS (software as a service) applications to enhance and innovate their non-core business processes e.g HR, CRM and accounting. Moreover, the cloud has paved its way into areas like KYC verification and AML screening for security analytics. In fact, according to digital trends 2018 report, the fast-paced financial institutions are three times more likely to invest in cloud-based solutions and technology. To say, cloud solutions are going to settle the financial technology market offering greater flexibility and efficiency won’t be an understatement.

Artificial Intelligence to Address Complex Issues

The buzz surrounding AI-powered applications and services in Financial Technology is intense. Traditional financial institutions are leveraging this advanced technology to enhance their operations. Approximately 20% of the organizations have already started utilizing AI, and more than 40% are looking forward to implementing it in the near future. Furthermore, up to 25% of the banking activities and operations are expected to be performed by AI-powered machines. One example of such a leading player is JPMorgan Chase. It is utilizing the COIN- Contract Intelligence machine learning program to automate the legal documentation reviews and reducing the human-effort and cost. 

Similarly, other institutions are also using AI-based identity verification and KYC services to speed up the onboarding process and eliminating frauds. AI is certainly a great influence on the customer’s experience and potentially reducing the cost of certain operations. Financial technology industries will see more usage of advanced machine learning and modeling techniques in upcoming years to deal with more complex business processes.

Investors are becoming more Selective

With the financial technology boom gaining ground, investors are becoming cautious and selective. Though there is no impact on overall funding, however, the investments in early-stage startups have significantly decreased by more than half between 2014 and 2017. The technology investors are looking for more reliable, later-stage financial technology institutes that can promise substantial scale and profits. This will give a tough time to startups and companies with no defined path for monetization, to meet with the rising funding demands.

Some institutions are no doubt, successful in raising sums but still, they are facing hurdles in monetizing their products. The reason is customer adoption of innovative business models takes time. For instance, blockchain start-ups are attracting customers and venture capital because of new payment infrastructure. However, because of being in prototype mode and leap to revenue-generation, the incumbents are cautious about blockchain startups. 

User Experience is not enough

The explosion of technology has pushed banks and financial institutes toward digitization. Looking back to the days of traditional banking, financial Technology captured the market by building a decent mobile application with great user experience (UX). But now it isn’t easy anymore since most organizations have transformed their user experience. Now every bank is offering a fully remote, mobile functionality with a classy design to win over customers. 

Customers now want more reasons to switch to new financial technology offers rather than great user experience.

The partnership between Global Banks and Fintech expected to grow

As technology is rapidly advancing, the thin line between financial technology and financial institutions is blurring due to their increasing partnerships. The increasing trend of financial technology has raised an unknown fear in global financial institutions. They could lose a significant market share to financial technology innovators. To cope up with competitive pressure, global banks are looking for ways to invest in financial technology companies. In fact, with direct collaboration, the partnership between global banks and fintech is expected to grow in the upcoming years.

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