Finastra Debuts Compliance-as-a-Service to Combat Fraud

Financial software firm Finastra has debuted a “Compliance-as-a-Service” solution for banks.

The new tool, announced by the British company Thursday (Sept. 14) and available on Microsoft Azure, includes real-time anti-money laundering transaction screening from Fincom and ThetaRay’s artificial intelligence (AI)-powered transaction monitoring.

According to a news release, the solution lets banks in Europe and the U.S. streamline and automate compliance processes and deliver instant payments.

“Finastra Compliance-as-a-Service helps banks take advantage of, and comply with, a range of instant payment infrastructures, including the FedNow® Service in the U.S. and TIPS in Europe, while mitigating the increased risks of financial crime,” the release said.

“With real-time compliance screening by Fincom and real-time AI-powered transaction monitoring from ThetaRay, the service will allow financial institutions to accelerate business growth, increase risk coverage and reduce operational costs,” the company added. 

The launch comes as both financial institutions and fraudsters are increasing their use of AI tools.

“The application of technology isn’t just reserved for the good guys … and bad actors are accelerating what I would call an arms race, using all of those technologies,” Tobias Schweiger, CEO and co-founder of Hawk AI, told PYMNTS CEO Karen Webster on Thursday.

“As a financial institution, one has to be aware of that accelerated trend and make sure your organization has enough technology on the good side of the equation to fight back.” 

Newly published PYMNTS Intelligence shows that more than 40% of U.S. banks experienced an increase in fraud year over year, nearly double what they reported in 2022. 

This spike in the number of fraudulent transactions represents a higher value of fraudulent losses and spotlights the fact that bad actors are getting better at bypassing legacy defenses. These include the simple, decades-old systems based on simple rules engines that Schweiger said no longer provide enough protection. 

“Upgrading solutions and systems to also include machine learning (ML) and AI is really the only way [forward],” he explained.

And as scammers become more clever, fraud programs need to become more precise in detecting relevant or suspicious behavior, Schweiger added.

“I don’t think there is any winner at the end,” he said. “Firms just need to be as quick as the criminals … the solution is to continuously learn by returning models, backtesting on things that happened in the past, and calibrating defenses to protect and avoid organization-specific problem behaviors more precisely.”