The digital conversion of financial services was already well underway before COVID-19, but the pandemic and the physical world’s resultant shutdown pushed it into overdrive almost overnight. And that changes the digital security playing field forever, according to Melissa Townsley-Solis, co-founder and CEO of GIACT; and James Mirfin, head of digital identity and financial crime at Refinitiv, who spoke recently with Karen Webster in a roundtable discussion.
Mirfin said that when the market sees a massive change like this one, fraudsters don’t go to the boardroom to develop their new strategy – they just jump right in and start stealing any way they can. And unfortunately, they’re getting better by the day, he noted.
“They move fast,” Mirfin said. “They use technology at scale to go after vulnerabilities and weaknesses wherever they find them. And I think we're going to see that more and more as technology becomes available for criminals.”
And unfortunately, Townsley-Solis noted, solutions for fighting fraudsters haven’t kept pace with the rapid digitization that has unfolded in the past half-year. The fraudsters have gotten smarter, better-funded and more technologically equipped.
She said that means it’s time for FIs, government agencies and corporations to start keeping up and to “rethink what solutions they’re using,” with a better eye toward securing things end to end. Otherwise, entities risk paying the cost of fraud, which can be incredibly high.
“For example, they're saying that billions of dollars were paid out through the stimulus to fraudsters,” Townsley-Solis said. “We've got to do something about this.”
Why Refinitiv Is Acquiring GIACT
Mirfin said the tie-up will wed GIACT's fraud-fighting and verification capabilities with Refinitiv’s existing risk and AML/KYC compliance capabilities to provide customers with a richer, more expansive, end-to-end security solution.
“We aim to be able to give them one holistic offering that they can access in real time and to protect institutions throughout the customer's lifecycle,” he said. “That's something the market is looking for especially right now, and we can offer it together.”
Smoothing Out The Seams In Security
Mirfin and Townsley-Solis said institutions have historically used piecemeal solutions to iron out their AML/KYC compliance and fraud management needs. By taking a lot of point solutions and stitching them together, the outcome has essentially been a DIY, end-to-end solution built out of various parts.
But the problem, they noted, is that where solutions are stitched together, there a lot of seams in the process, which makes everything from integration to management both inefficient and less effective than it should be.
“It used to be that you could go out [and] put four or five solutions together, but that doesn’t work anymore,” Townsley-Solis said. “Bringing different data points together – and determining what to do with that data, how to look at patterns, how to bring things together – becomes critically important to fight fraud. So if you're not changing the way you're looking at fraud and the solutions, and if you're not updating those to meet the current needs, you're losing. You're already behind.”
Mirfin said the power of one end-to-end solution is that it brings in more of that data and serves it up to organizations in a way that’s holistic and more easily consumed and acted upon. And it’s available through a single integration.
And perhaps more importantly, the combined firms can open this capability up to small and mid-tier businesses. Historically, only the largest of the large companies could afford the data teams necessary to really take on these issues.
“What we can do jointly is help connect the dots and bring these different data sets and capabilities together quickly and at scale,” Mirfin said. “One of the things we're really excited about is bringing the two capabilities together across our organizations, taking the 40,000-plus customers that Refinitiv has around the world, and taking this end-to-end platform into international markets.”
The Leading Edge Of A Coming Future
Ultimately, defragmenting the security process such that it protects the digital financial ecosystems requires a holistic response rather than scores of point solutions taking small, individual bites out of the bad guys, Mirfin said.
He added that the trend among standard-setting bodies and regulators is increasingly pushing toward such holistic systems. That has pushed institutions to focus on bringing their own internal teams together in terms of how they think about risk – something that hasn’t always been the norm in organizational structures that favor silos.
“But they are also looking for a holistic technology solution to address this converging risk across fraud, identity, AML and cybercrime,” Mirfin said.
He and Townsley-Solis said that kind of holistic solution is what GIACT and Refinitiv hope to build together once their deal closes in late 2020 and they begin the building project in earnest in early 2021.
Townsley-Solis said that’s a project both companies are genuinely excited about, because they’re hearing from their individual client bases that there’s a lot of hunger for that more holistic view of risk.
“They are looking for a company that can bring all the different solutions they really need within fraud risk and AML,” she said. “Because we know that when you can provide those services together, it gives you a different picture than what you normally see when you try to piecemeal solutions together.”