How to leverage transactional data for mitigating risk

In the world today, there are many different kinds of financial risks and dangers. The international financial community regularly has to try and mitigate money laundering, cyber fraud, and terrorist financing, not to mention the thousands of phishing scams and text message cons that try to get individuals and businesses to part with their hard-earned cash. As international payments become quicker and easier to make, combating these issues becomes an increasingly difficult task.

On top of this, as payments become easier, the amount of payments being made has increased. We no longer have to find the time to perform a transaction by walking into a bank or calling our branch. Instead, we can log into our bank account online, use our banking app, pay via a website, or use a third-party service like PayPal. However, as the number of transactions we make increases, so does the amount of transaction data we generate. These datasets lack standardisation, are often spread across multiple systems, and are delivered in several formats.

As a business, having access to transactional data and knowing how to analyse it is critical to avoiding costly financial losses and damaging your company’s reputation. You want to know where your money is going, and that the right person is getting the right amount. Your customers also want to know their money is safe with you. If they experience data breaches or financial losses because they choose to deal with your company, they will not forgive you easily. If it is alleged you were negligent in some way, as was the case with Walmart in June 2022, you may even find yourself facing a costly lawsuit and the possibility of having to pay huge levels of compensation.

Sadly, cyber fraud is everywhere. According to Action Fraud, £9.6 million was lost to cybercrimes between 2020 and 2021. Ransomware, phishing and weak passwords were all key enablers of these crimes, with the pandemic helping criminals to prey on the more vulnerable people and organisations in society.

How can we combat these dangers and take some of the worries away from both ourselves and our clients? Here are some of the important things you can do to make a start.

Ensure you have all the data you need and that it is easily available to you.

Getting all message data for payments, including those that come from other branches and from different correspondents, is a good first step. This will help you identify and quantify risks within your institution’s transaction activities.

Matching in-house data with exterior data from banks and other payment services will help to achieve this without causing any data or security breaches.

Look for unusual behaviour

Sometimes it is easy to discover and understand who you are receiving a payment from, but not necessarily the other banks that are sitting behind the transaction.

Monitoring payments and looking for discrepancies is crucial when trying to spot areas of risk. Using reliable accounts software like Xelix should help you do this with ease, enabling you to conduct risk assessments and change risk policies where needed.

Use analytics to help with important decisions

A reliable analytics programme will ensure that most data can be collated and analysed with ease, accuracy, and speed, saving you a lot of time and money. Such software may also help to ensure transaction data is correct and identify flaws in your current system. It will also help you meet legal data quality standards.

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