Financial Crime and Fraud Management Solutions: Technology Remains a Double-edged Sword
The emergence of advanced technologies is not only reshaping the finance industry but is also making it vulnerable to severe financial threats such as identity theft, cyber stalling, card skimming, and phishing. In addition, the younger generation of investors is showing proclivity for digital or cashless transactions, and this is pressing financial institutions even more to arm themselves with efficient financial crime and fraud management solutions.
FinTech breakthroughs, while they facilitate online financial transactions, are indicating an upsurge in the adoption of next-generation technologies, including artificial intelligence, data science, and machine learning, to fight financial crime and frauds. This is laying the groundwork for innovations in the financial risk management landscape, creating immense sales potential for financial crime and fraud management solutions in today’s finance industry.
Transparency Market Research’s (TMR) recent study sheds light on the developments in financial crime and fraud management solutions, and how technology is becoming the biggest catalyst for market players to fetch profits in this landscape. The study can arm decision-makers with value-based insights to meet the dynamic needs of various end users, and eventually upscale their position in this highly-competitive market space.
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Evolution of the Financial Crime and Fraud Management Solutions Market in the Digital Age
Financial institutions, including banks, have always been reeling under the pressure of regulations and security concerns. However, in the Information Age, sophisticated fraudsters have found new ways of attacking banking systems with technologically-advanced tools. Financial institutions, today, are under tremendous pressure to accelerate digital transformation and combat financial crimes and frauds, and meet customer demand for immediacy and personalized experience, ultimately to boost business.
As the introduction to digital banking services has created opportunities for fraudsters to digitally attack the finance industry, the demand for more efficient solutions for managing financial frauds and crimes has surged significantly in the past few years. The global market for financial crime and fraud management solutions reached the ~ US$ 1 billion mark in 2018, and is expected to witness healthy growth in the coming decade.
The demand for tech-driven crime and fraud prevention solutions is increasing exponentially across the finance industry. However, financial service providers are struggling to achieve both, efficiency and effectiveness in their financial crime and fraud management frameworks, failing to sync with the rise in demand.
In addition, introducing a fraud management solution that can be compatible with the traditional banking system, while limiting the production cost, is one of the biggest challenges for financial crime and fraud management solution firms. Furthermore, the constantly changing regulatory environment and tightening rules in the finance industry are likely to make it more challenging for financial risk management companies to launch a solution that updates with changing legislation around the world.
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Lucrative Opportunities in the Banking Sector and Specialty Finance Industry
Loss of customer trust can be costly, especially in the finance industry, and the convergence of technology with the industry is amplifying the need for a reliable and efficient financial crime and fraud management solution among financial institutions. Traditional banking organizations as well as specialty finance bodies are making a rapid shift from conventional financial risk management protocols to advanced fraud management technologies.
As the customer is at the forefront of banks’ business policies, increasing concerns of customers about secure banking, especially with mobile or Internet banking, are triggering banks to adopt robust fraud detection and prevention solutions. In 2018, banks accounted for ~ 60% revenue share of the global financial crime and fraud management solutions market. Stakeholders in the market are targeting banking institutions to offer their state-of-the-art financial fraud management services tailored to the requirements of the banking sector.
In addition, the rise of financing activities in the specialty finance sector is expected to create new opportunities for financial crime and fraud management solution companies in this category. In the coming years, market leaders are likely to expand their presence beyond the traditional customer base of conventional banking institutions, and tap into the sales potential in specialty finance businesses.
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Balancing Automation and Regulatory Compliance: A Key to Win in Future
With the intensifying competition in the financial crime and fraud management space, market players are introducing more efficient solutions for the earlier detection and prevention of multichannel and complex frauds. In addition, reducing reputational risk while improving customer protection capabilities with more effective risk management frameworks is expected to remain the top priority for stakeholders in this landscape.
Market players are more inclined towards implementing Robotics Process Automation (RPA) techniques to replace time-consuming and expensive processes in the traditional fraud detection and prevention fundamentals of the finance industry. With the increasing prevalence of machine learning, Artificial Neural Networks (ANN), and Natural Language Processing (NPL), RPA is expected to reach its renaissance in the financial crime and fraud management solutions market with real-time fraud detection and prevention capabilities.
Stakeholders are also increasing their focus on ensuring regulatory and internal policy compliance while implementing state-of-the-art RPA tools in financial fraud management solutions. In order to remain ahead of the competition, market leaders are achieving expertise at balancing the RPA features with compliance with anti-fraud laws and regulations, such as the Foreign Corrupt Practices Act (FCPA) and Foreign Account Tax Compliance Act (FACTA), in financial crime and fraud management solutions.
Financial Crime and Fraud Management Solutions Market: Moderately Consolidated Landscape
Leading finance service providers such as IBM Corporation, Capgemini SE, Oracle Corporation, and Fiserv, Inc., hold one-third revenue share, and their leading competitors, including SAS Institute, Inc., ACI Worldwide, Fidelity National Information Services, Inc. (FIS), and Dell EMC, account for close to half the revenue share in the market. Frontrunners have maintained their stronghold in the landscape with technological expertise and their reach spread worldwide.
Emerging players in the financial crime and fraud management solutions landscape are still struggling to establish a strong position, as high initial outlay in creating a major barrier for entry for start-ups and small businesses. In addition, customers’ loyalty towards solutions by big brands is hampering the growth of new entrants in the financial risk management industry. However, increasing foreign investments in developing countries in Asia Pacific, where large companies have a low presence, is expected to create sales opportunities for emerging players in the coming years.
Authors of TMR’s study on the financial crime and fraud management solutions market are of the opinion that, the growth of this landscape will mainly depend upon the purchasing capabilities of buyers, and financial service providers’ skill of introducing efficient and effective fraud management solutions.
Though the demand is likely to surge, the high initial installation cost of financial risk management tools is restricting the target customer base for market players. In addition, market players are struggling to offer efficiency, resilience, and a better customer experience while keeping the cost of financial crime and fraud management solutions under a certain limit.
Stakeholders in the financial crime and fraud management solutions market will have to increase the adoption of next-generation technologies such as NPL, ANN, and AI, to automate real-time fraud detection and prevention solutions. Significant investments in research & development will help market players tap into the sales potential for innovative and more efficient fraud management solutions in the coming years.
Global Financial Crime and Fraud Management Solutions Market: Overview
- According to a new market report pertaining to the global financial crime and fraud management solutions market published by Transparency Market Research, the global financial crime and fraud management solutions market is projected to reach a value of ~ US$ 1.5 Bn by 2027.
- The financial crime and fraud management solutions market is projected to expand at a CAGR of ~ 4% from 2019 to 2027.
- Growth of the financial crime and fraud management solutions market can be attributed to the increase in the number of financial fraud cases.
- Over the forecast period, Asia Pacific is anticipated to grow rapidly in the global financial crime and fraud management solutions market, at a CAGR of ~ 5%.
- Moreover, in terms of share, the global financial crime and fraud management solutions market is dominated by North America, followed by Europe.
- In the financial crime and fraud management solutions market, the services segment was valued at ~US$ ~603 Mn in 2017, and is expected to reach ~ US$ 940 Mn by 2027, expanding at a CAGR of ~ 5% during the forecast period.
Stringent Government Regulations for Financial Data Privacy
- The governments of many nations are framing strict rules and regulations to prevent financial frauds and financial crimes. The rise in losses due to fraud payments and unauthorized access to public financial accounts is pushing the financial industry to adopt methods or solutions to prevent such activities.
- The sudden increase in transaction volume as well as usage of wireless technology in the banking sector has led to an increase in the number of financial fraud cases, because the scope of unauthorized access has greatly increased.
- According to a report published by UK Finance, a new code was published for signatory payment service providers to protect customers from unauthorized push payment scams. Such amendments and rules and regulations have led financial institutions to adopt solutions such as financial crime and fraud management to prevent further risks and to follow government regulations.
Financial Crime and Fraud Management Solutions Market: Segmentation
- The global financial crime and fraud management solutions market has been segmented in terms of component, end user, and region.
- Based on component, the financial crime and fraud management solutions market has been classified into hardware, software, and services.
- Based on end user, the financial crime and fraud management solutions market has been classified into banks, credit unions, specialty finance, and thrifts.
Financial Crime and Fraud Management Solutions Market: Regional Outlook
- In terms of region, the global financial crime and fraud management solutions market has been segmented into North America, Europe, Asia Pacific, Middle East & Africa, and South America.
- North America is expected to dominate the financial crime and fraud management solutions market during the forecast period.
- Asia Pacific is expected to witness increasing growth of the financial crime and fraud management solutions market, with China and India being the major markets in the region.
- The financial crime and fraud management solutions markets in the Middle East & Africa, Europe, and South America are also expected to expand rapidly during the forecast period.
The report provides in-depth segment analysis of the global financial crime and fraud management solutions market, thereby providing valuable insights at macro as well as micro levels. Analysis of major countries that hold growth opportunities or account for significant shares has also been included as part of the geographic analysis for the financial crime and fraud management solutions market.
Financial Crime and Fraud Management Solutions Market: Competition Dynamics
The research study includes profiles of the leading companies operating in the global financial crime and fraud management solutions market. Key players profiled in the report include
- Oracle Corp.
- SAS Institute Inc
- Experian Information Solutions, Inc.
- Dell EMC
- ACI Worldwide
- Fiserv, Inc
- IBM Corp
- Polaris FT
- NICE Ltd
- Capgemini SE.
Transparency Market Research (TMR) recently published a market study on the global market for financial crime and fraud management solutions. It presents complete assessment of the key market dynamics, including the drivers, market trends, and challenges, as well as the structure of the financial crime and fraud management solutions market. TMR’s study offers valuable information about the financial crime and fraud management solutions market to elucidate how growth will discern during the forecast period of 2019-2027.
Key indicators of market growth, which include Year-on-Year (Y-o-Y) growth of the market, value chain as well as supply chain analysis, and Compound Annual Growth Rate (CAGR), are explained in TMR’s study in a comprehensive manner. This information can help readers understand the quantitative growth prospects of the financial crime and fraud management solutions market during the forecast period.
An extensive analysis on leading market players’ business strategies is also featured in TMR’s study on the financial crime and fraud management solutions market. This can help readers understand important factors to envisage growth in the financial crime and fraud management solutions market. Readers can also find, in the study, precise information on the qualitative and quantitative growth prospects of the financial crime and fraud management solutions market, which can help market players make apt decisions in the future.
Segmentation of the Financial Crime and Fraud Management Solutions Market
TMR’s study on the financial crime and fraud management solutions market classifies information into three important segments—component, end user, and region. Changing industry trends and other important market dynamics associated with these segments of the financial crime and fraud management solutions market are discussed in detail.
The study also offers complete information about the developments in the financial crime and fraud management solutions market based on the components of financial crime and fraud management solutions and end users across five geographical regions - North America, Europe, Asia Pacific, Middle East & Africa, and South America.
Middle East & Africa
Key Questions Answered in TMR’s Financial Crime and Fraud Management Solutions Market Study
- What is the scope of growth for financial crime and fraud management solution companies in the banking sector?
- What is the influence of changing trends in technologies on the financial crime and fraud management solutions market?
- Will North America continue to remain the most profitable regional market for financial crime and fraud management solution providers?
- Are there any risks of investing in developing markets for financial crime and fraud management solutions?
- Which factors will impede the growth of the financial crime and fraud management solutions market during the forecast period?
- Which are the leading companies in the global financial crime and fraud management solutions market?
- How are changing regulatory frameworks and rapidly evolving technologies influencing the upcoming trends in the financial crime and fraud management solutions market?
A unique research methodology is utilized by TMR to conduct extensive research on the growth of the financial crime and fraud management solutions market, and reach conclusions on the future growth parameters of the market. The research methodology is a combination of primary and secondary research, which helps analysts ensure accuracy and reliability of the conclusions.
Secondary resources referred to by analysts during the production of the financial crime and fraud management solutions market study include statistics from internal and external proprietary databases, annual reports, SEC filings, company websites, World Bank database, investor presentations, relevant patent and regulatory databases, statistical databases, government publications, and industry white papers. Analysts have interviewed senior managers, product portfolio managers, CEOs, VPs, marketing/product managers, and market intelligence managers, who contributed to the development of this report as a primary resource.
Exclusive information provided by primary resources and secondary resources acts as a validation from financial crime and fraud management solutions market players, and makes TMR’s estimates on the future prospects of the financial crime and fraud management solutions market more accurate and reliable.