1.
USA Banking Survey
2019
Should Banks Adopt an Integrated
Approach to Fraud Management
and AML Compliance?
The convergence of fraud management and anti-money
laundering (AML) compliance within US banks has long been
predicted but very few have created a single crime fighting unit.
This survey uncovers the convergence strategies and plans of banks
in the USA.
Better Decisions

2.
© 2019 Fair Isaac Corporation. All rights reserved. 2
USA Banking Survey 2019
Introduction
For many years the US banking industry has talked about the fraud and AML compliance
departments working together more closely. It’s widely discussed that convergence of
the two functions will support more effective financial crime* management and improve
operational efficiency. But it is difficult to gauge how far along the path to a single crime
fighting unit most banks are. To understand the banking sectors strategies, concerns and
plans for financial crime integration, FICO commissioned independent research.
About the survey
This survey of 114 banks across 6 countries or regions, was carried out by research
company Ovum. Senior management in fraud and AML compliance functions answered
a comprehensive survey. The results in this e-book focus on the responses from US
respondents.
Profile of respondents
• US banks with a minimum of 500k customers (66% of respondents had over
5 million customers)
• Job titles: Those with direct responsibility for either AML Compliance or fraud
management from; technology, security, fraud, AML compliance, risk, operational
compliance.
*For the purposes of this e-book the term ‘financial crime’ encompasses both fraud and compliance for anti-money laundering

3.
© 2019 Fair Isaac Corporation. All rights reserved. 3
USA Banking Survey 2019
What drives financial crime strategy for US banks?
Customer experience is a major driver for US banks, particularly:
• Customers being the victims of financial crime
• The customer experience impact of measures designed to prevent financial crime
The impact of managing financial crime on customer experience is less of a concern, suggesting disruption to the customer journey is a bigger
problem than the experience of customers as cases involving them are investigated.
Reputational damage is the biggest concern for AML compliance teams whereas fraud teams consider customers being the victims of financial
crime the most significant issue.
18%
Broader business impact from tackling
financial crime
Regulatory fines from
compliance breaches
Direct financial losses to your institutions
from financial crime
Impact of financial crime management on
customer experience
Operational costs involved in tackling
financial crime
Customer experience impact of anti-financial
crime activities
Reputation damage from failures to tackle
financial crime
Customers being victims of
financial crime
36%
30%
33%
45%
45%
45%
45%
% reporting as a significant concern
Recommendation:
Improving the accuracy of
detection by using machine
learning for fraud will
protect both the bank and
its customers. Artificial
intelligence that has been
specifically developed for AML
can help improve detection
rates and reduce the likelihood
of unwittingly allowing money
laundering and so protect
reputation.

4.
© 2019 Fair Isaac Corporation. All rights reserved. 4
USA Banking Survey 2019
What prevents US banks from achieving their financial crime objectives?
Ensuring detection rates are high is a significant pain point for US banks, particularly for those involved in AML compliance, this contrasts with Europe
where high detection rates are a much bigger pain point for fraud teams.
US banks are less concerned about high rates of false positives than their European counterparts, false positive rates are a pain point for:
• 44% of European banks
• 24% of US banks
US banks are also concerned about managing high volumes of alerts, suggesting that although they are concerned about missing cases they already
have a substantial workload from those they do identify.
Ensuring detection rates are high
High levels of false positives
Managing high workload volumes due to
defensive SAR filings
Speed in responding to new financial
crime threats
Managing increasing levels of alerts
Time taken to process alerts
Disconnected approach to managing
financial crime
Changing compliance requirements
Lack of overall business buy-in to controls
and requirements
Lack of technological innovation
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
Rank 1 Rank 2 Rank 3
Recommendation:
To better manage high volumes
of alerts banks should focus
on improvements to case
management making it more
efficient and less of burden for
investigative teams. This can
be combined with the use of
machine learning across both
money laundering and fraud to
ensure high detection rates.
Respondents were asked to select their top 3 concerns from these categories and rank those 3 concerns.

5.
© 2019 Fair Isaac Corporation. All rights reserved. 5
USA Banking Survey 2019
How do banks think they will benefit by integrating fraud
and AML Compliance?
US banks expect the highest level of benefit to come from improvements in overall detection effectiveness, given detection rates is identified as a major
pain point for them it is encouraging that they expect integration to help with this.
It is also expected that convergence of the fraud and AML functions will deliver benefits in terms of cost reductions particularly in data management.
US respondents see a wide range of benefits to taking an integrated approach though they were less likely to consider rationalization of redundant
systems and overlapping functionality as a benefit compared to respondents from other countries.
Operating cost benefits - technology
Greater scalability
Greater overall detection effectiveness
Stronger consistency in controls
Eliminating redundant systems and
overlapping functionality
Operating cost benefits - staff
Operating cost benefits - data
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
High benefit More benefit Some benefit Low benefit
Recommendation:
With high expectations for a
broad range of benefits, US
banks should take care that
as they transition to integrated
financial crime departments
they select appropriate
technology to support them
across both fraud and AML
compliance.

6.
© 2019 Fair Isaac Corporation. All rights reserved. 6
USA Banking Survey 2019
How integrated are banks financial crime functions currently?
US banks currently report low levels of integration
• Only 24% of US banks have fraud and AML compliance functions reporting into the same business executive.
• In Canada the figure is 57% and in Europe its 37%.
There are some US banks with low levels of collaboration and fully separate functions for all categories assessed, this contrasts with other countries
where responses tended to rarely state there was complete separation.
Recommendation:
To catch up with this global
trend, US banks must take a
proactive approach to aligning
their financial crime functions
and should look to support
this with technology that can
accelerate their progress.
Data
Investigation systems
Controls
Detection systems
Financial crime-related
employees
Business processes
(e.g. investigations)
Function management
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Integrated High level of collaboration Low level of collaboration Fully separate

7.
© 2019 Fair Isaac Corporation. All rights reserved. 7
USA Banking Survey 2019
Do US banks have ambitions for full integration?
US banks are not only less integrated than those in other countries, with the exception of the Nordics they also have lower ambitions to become fully
integrated. All US banks surveyed do have some plans in place for fraud and AML compliance functions to work together more closely, with almost three
quarters describing their plans as strategic:
• 24% of US banks have strategic plans to fully integrate their financial crime functions
• 48% have strategic plans to share resources where synergies exist
• No US banks report neither strategic nor tactical plans for integration
Recommendation:
Banks wanting to integrate
their financial crime functions
still need expertise in both
fraud management and AML
compliance They should seek
partners that can support them
with world-class expertise in
both domains.
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
0%
UK
South
Africa
Germany
& Austria
Canada USA Nordics
% With Strategic Plans For Full Integration US banks’ plans for integration of
financial crime functions
48%
12%
15%
24%
Strategic plan to fully integrate functions
Strategic plans to share resources where synergies exist
Tactical approach to sharing resources where synergies exist,
active drive for this
Tactical approach to sharing resources where synergies exist,
no active drive for this

8.
© 2019 Fair Isaac Corporation. All rights reserved. 8
USA Banking Survey 2019
How quickly do banks plan to integrate their financial crime functions?
While US banks are less ambitious than other nations in the degree to which they seek integration, their timelines for achieving their plans are ambitious.
• 86% of US banks expect to achieve their planned integration within three years
• Only 72% of Canadian banks and 64% of European banks expect to achieve the same timelines.
Recommendation:
Given the ambitious timelines
that US banks have for
integration of their financial
crime functions they will need
supportive partners who
can help them. Technology
implementations that take
months to go live and weeks to
make simple changes will not
meet requirements.
Within 1 year
1 year to less than 2 years
2 years to less than 3 years
3 years to less than 5 years
5 years and more
4%
36%
46%
14%
0%

9.
© 2019 Fair Isaac Corporation. All rights reserved. 9
USA Banking Survey 2019
Conclusions
While the vast majority of banks in the USA have plans to integrate their financial crime
functions, they are not currently as integrated as banks in other countries and don’t intend
to integrate as tightly. Their timescales to achieve the plans they do have are however
ambitious.
Those banks in the US that have not yet developed a convergence strategy may see their
profitability suffer as they won’t experience the cost reductions this enables. Those who
have successfully embraced convergence will drive down their exposure to financial crime;
this could make those that haven’t, more attractive to criminals looking for vulnerable
targets.
While US banks can’t be seen as early adopters of a more integrated approached they
have the chance to overtake those countries who are. Technology that can help them
accelerate integration is now available and they can capitalize on the experience of those
that have gone before.
To understand more about the survey results with interpretation by leading industry
analyst Daniel Mayo from Ovum, read the whitepaper: Adopting an integrated approach
to fraud and financial crime compliance.
How FICO helps
We have built on our rich heritage of providing fraud and anti-money laundering solutions
to offer both from a single platform. Falcon X is a cloud-based platform that allows you
to seamlessly manage fraud and financial crime with unified case management, machine
learning analytics and flexible integration and orchestration of data. You can start using
Falcon X to support one function or accelerate benefits by using a converged platform
straight away.

10.
USA Banking Survey 2019
NORTH AMERICA
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© 2019 Fair Isaac Corporation. All rights reserved.
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