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Digital payment channels and PSPs have completely revolutionized the industry. While convenient, there are inherent risks associated with financial crime.
Payment service providers are well positioned to effectively manage these risks, but developing sound strategies to combat financial crime is no small feat.
To that end, there are at least four important points to consider.
Risk management can be greatly improved under the right segmentation strategy.
However, operating costs for payment service providers can be high given the resources required to monitor all clients and each transaction.
So the process should be leaner and more effective. In short, payment service providers should set their sights on finding a small subset of potentially high-risk customers, malicious actors, and illegal transactions.
Pursuing this strategy will not only lead to a more sophisticated segmentation model that ranks transactions and clients, but also to more efficient use of data and data points, i.e. regarding modern databases fetching from external sources. should also be connected.
By redesigning the model and incorporating external data, PSP complements static historical data with real-time assessment of information. This brings us to our second point.
Innovation drives better surveillance technology. Automated processes at payment service providers should therefore aim to integrate machine learning.
As we enter the age of artificial intelligence, AI models that can constantly learn from historical data while optimizing transaction monitoring will certainly move forward.
AI can also lead to faster, more definitive results that deviate from expected customer behavior. This allows for better decision-making and precise control targets.
But having the technology and being able to deploy machine learning doesn’t make the PSP an afterthought and deviate from the core customer.
Crime prevention measures should never lead to bad customer experiences.
As such, when payment service providers design customer onboarding and the entire customer journey, crime prevention measures should be a significant enhancement to these processes, rather than a middle ground.
Both customers and PSPs benefit from the underlying transparency. By identifying different risk types and layering controls onto the customer’s journey and other products, PSPs can effectively integrate teams and integrate infrastructure. This allows you to:
Anticipate potential needs and financial crime controls as a way to bring together various controls and reduce internal and external friction within the process
Identify possible pain points in the process when molding to conform by design
Identifying different risk types, mitigating each of them (e.g. sanctions, AML, etc.) and using their respective data to facilitate other processes
Make sure requirements are transparent
– Communicate clearly with customers and make faster decisions
Improving existing and new features
The result is not only a smoother customer experience, but also a clearer customer view of the PSP.
Each payment service provider operates under different conditions and is exposed to different types of risks, so the potential risk scenarios should also be different.
Identifying risk therefore goes beyond theoretical hypotheses to determine where and how each merchant is positioned in the value chain, what their role is, what types of customers they attract, and what types of customers they attract. You need to understand what your trading flow will look like.
This data-driven analytics effort must continue. Because it takes PSP monitoring to the next level by allowing tighter settings in terms of risk appetite alongside tighter controls when deviations are found.
As regulatory scrutiny intensifies, it would be better for PSPs to take the lead in three distinct areas: market participants, regulators and customers.
By taking a seat at the table when it comes time to set the regulatory agenda, PSPs are in a prime position to bring the best ideas to the industry and better define it.
Moreover, data sharing solutions between PSPs, banks and clients could certainly lead to a better understanding of financial crime and the development of new ways to combat it.
Finally, customer education is another theme that can help fight financial crime. The future of PSP is certainly bright, but among them, banks and clients, the motto for fighting financial crime may be ‘et pluribus unum’.
Digital payment channels and PSPs have completely revolutionized the industry. While convenient, there are inherent risks associated with financial crime.
Payment service providers are well positioned to effectively manage these risks, but developing sound strategies to combat financial crime is no small feat.
To that end, there are at least four important points to consider.
Risk management can be greatly improved under the right segmentation strategy.
However, operating costs for payment service providers can be high given the resources required to monitor all clients and each transaction.
So the process should be leaner and more efficient. In short, payment service providers should set their sights on finding a small subset of potentially high-risk customers, malicious actors, and illegal transactions.
Pursuing this strategy will not only lead to a more sophisticated segmentation model that ranks transactions and clients, but also to more efficient use of data and data points, i.e. regarding modern databases fetching from external sources. should also be connected.
By redesigning the model and incorporating external data, PSP complements static historical data with real-time assessment of information. This brings us to our second point.
Innovation drives better surveillance technology. Automated processes at payment service providers should therefore aim to integrate machine learning.
As we enter the age of artificial intelligence, AI models that can constantly learn from historical data while optimizing transaction monitoring will certainly move forward.
AI can also lead to faster, more definitive results that deviate from expected customer behavior. This allows for better decision-making and precise control targets.
But having the technology and being able to deploy machine learning doesn’t make the PSP an afterthought and deviate from the core customer.
Crime prevention measures should never lead to bad customer experiences.
As such, when payment service providers design customer onboarding and the entire customer journey, crime prevention measures should be a significant enhancement to these processes, rather than a middle ground.
Both customers and PSPs benefit from the underlying transparency. By identifying different risk types and layering controls onto the customer’s journey and other products, PSPs can effectively integrate teams and integrate infrastructure. This allows you to:
Anticipate potential needs and financial crime controls as a way to bring together various controls and reduce internal and external friction within the process
Identify possible pain points in the process when molding to conform by design
Identifying different risk types, mitigating each of them (e.g. sanctions, AML, etc.) and using their respective data to facilitate other processes
Make sure requirements are transparent
– Communicate clearly with customers and make faster decisions
Improving existing and new features
The result is not only a smoother customer experience, but also a clearer customer view of the PSP.
Each payment service provider operates under different conditions and is exposed to different types of risks, so the potential risk scenarios should also be different.
Identifying risk therefore goes beyond theoretical hypotheses to determine where and how each merchant is positioned in the value chain, what their role is, what types of customers they attract, and what types of customers they attract. You need to understand what your trading flow will look like.
This data-driven analytics effort must continue. Because it takes PSP monitoring to the next level by allowing tighter settings in terms of risk appetite alongside tighter controls when deviations are found.
As regulatory scrutiny intensifies, it would be better for PSPs to take the lead in three distinct areas: market participants, regulators and customers.
By taking a seat at the table when it comes time to set the regulatory agenda, PSPs are in a prime position to bring the best ideas to the industry and better define it.
Moreover, data sharing solutions between PSPs, banks and clients could certainly lead to a better understanding of financial crime and the development of new ways to combat it.
Finally, customer education is another theme that can help fight financial crime. The future of PSP is certainly bright, but among them, banks and customers, the motto for fighting financial crime may be “et pluribus unum”.
