With cybersecurity threats on the rise, the majority of financial services leaders in the UK expect crime in their sector to rise. Three-quarters of UK respondents told Kroll they thought there would be an upswing in financial crime – even as enforcement action increases.
Directly and indirectly, fraud costs UK businesses as much as £158 billion each year. With economic growth stagnating, the impact that figure has on firms is magnified considerably – particularly in the financial sector, where the large amounts of capital and data at play make firms a prime target.
As a result, it seems that UK executives in the financial services space are among the most anxious in the world, according to a new study from Kroll. The consultancy surveyed over 600 business leaders in the US, the UK, Europe, Asia Pacific, the Middle East and Africa – with respondents including CEOs, chief compliance officers, general counsel, and chief risk officers from leading financial services, accounting, insurance and legal services firms.
Source: Kroll
UK concerns
Overall, 71% of all respondents said they thought financial crime would rise in the coming period. But in the UK, that spiked to 76% – behind only the APAC region.
This was the case even as a 62% majority of respondents said they anticipated more co-operation between regulators and financial institutions. Meanwhile, 55% said they expected a rise in the amount of enforcement action relating to financial crimes – including 15% who said it would likely increase significantly.
Somewhere along the way, executives seem to have lost faith in the effectiveness of such action, then. Possibly explaining why they think crime will increase even as enforcement action becomes more common, only 39% of respondents said they were “very confident” in their own financial crime compliance program’s sanction screening capabilities, and just a third say their programmes are very prepared to address geopolitical issues over the next 12 months.
Source: Kroll
Brent Tomlinson, co-president of risk advisory at Kroll, commented, “It is a worrying, but not surprising, revelation that sophisticated financial risk and compliance leaders feel less prepared than ever to prevent and mitigate rising financial crime risks in today’s complex global environment… Financial crime remains a major global concern and professionals in all sectors will need to be on the top of their game, partnering with experts on risk analysis, decision-making support, and mitigation plans, if they are to protect and grow their businesses.”
Tech threats
Technology was cited as the chief concern of professionals polled by Kroll. A 68% majority of the financial services leaders that expected financial crime risk to increase, also said cybersecurity would be the biggest driver of exposure. Meanwhile, 49% said they would expect to invest in AI solutions as part of their efforts to tackle that. But an over-reliance on the new technology may also be hindering their security efforts.
AI is often treated as a silver-bullet, with executives throwing money at it in the belief it will simply bail them out in a way human talent cannot. To that end, AI is primarily being used by 66% to identify suspicious behaviour, while 54% use it for network analysis, and 445 for identifying risk signals. But while 27% of organisations now use it in such capacities, up from 24%, only 20% of those say it has had a “very positive” impact on their financial crime compliance framework – a fall from 37% in 2023.