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The Role of Policy Management in Preventing Financial Fraud in Banking

The role of policy management in preventing financial fraud in banking

Financial institutions such as banks and credit unions face a very high level of risk. This risk is inherent and built into the banking business model, making for a complex risk management and mitigation landscape. Fortunately, good policy management practices can position a bank to prevent financial fraud and theft. 

Understanding the Prevention of Financial Fraud in a Bank Setting

Financial fraud is one of the most significant challenges confronting banks, especially when you consider that the risk exists from the inside and from the outside. 

External threats abound, there is no shortage of fraudsters and cybercriminals who may target a financial institution from the outside. The days of bursting into a bank and demanding cash are largely over, especially with banks hiring armed security guards to protect their premises. Today’s incidences of financial fraud and theft have gone high-tech, with cybercrime being the preferred option amongst the criminal element. This makes digital security measures more important than ever before for banks, credit unions, lenders, and other financial service providers. 

Banks must also deal with internal threats from bad actors who may seek out a banking job in an effort to get easier access to a bank’s finances. Third parties such as contractors and vendors represent yet another risk factor. In fact, third-party risk management and mitigation platforms — also known as TPRM software solutions —  have gained never-before-seen levels of popularity. TPRM software platforms feature a variety of features such as the ability to perform background checks, company reputation checks, and tools for continual third-party monitoring. 

A well-built policy management platform will include tools that consider both internal and external threats.

Developing a Policy Management Software Platform for Your Bank

A custom policy management software solution can bring a significant ROI by improving processes, increasing efficiency, and driving greater profitability.  

Custom-architecting policy management software platforms can bring significant benefits to a bank, both from an operational perspective and from a stance of risk management and mitigation. To achieve this, you need a collaborative process between the client and the development team. The development team must have a solid understanding of the bank’s processes, challenges, pain points, and objectives. With this knowledge, your developers can determine the ideal architecture and feature set for your bank’s software platform.

The following overview outlines some of the key points that will need to be addressed as the scope is developed for your custom policy management software platform. 

Who will be using the platform? And how will those individuals use the software? – Your development team will need information on the different user roles on the platform, including who they are and how they will be using the software. User roles and permissions are very important when it comes to a bank’s software systems. The best practice is for users to have only the minimum amount of access required to perform their duties. This minimizes data “exposure” and reduces vulnerabilities from a risk management perspective.  

What security measures are required? – Banks require stringent security measures to protect their policies, data, and IT systems. In fact, legal and regulatory compliance requires a fairly high level of security for banks since they deal with sensitive personal information and financial data. Your development team must understand the risks that your bank is confronting so that they can implement appropriate security features such as firewalls and encryption.  

How will security breaches be handled? – Banks must convey information on how security breaches will be handled so that developers can create an efficient notification system. A robust policy management strategy also plays an important role here. You want to position your IT admins to receive prompt alerts when a security breach has been detected, making it possible for them to act quickly and decisively. 

What are the bank’s data retention and storage needs? – To achieve and maintain regulatory compliance, banks are required to implement and deploy a fairly high level of security. These security features may include encryption and firewalls, amongst other measures. A bank’s policies should clearly indicate the ideal course of action in response to ransomware, malware, viruses, data breaches, and other security breaches. This way, the development team can architect an effective alerts system with in-software-platform prompts that provide admins with guidance for responding to an incident.

Technology to Reduce Incidence of Financial Fraud and Cybercrime

At iTech, we help our clients to make the most of their data and this includes providing sufficient platform security protections. These measures are essential for achieving and maintaining both legal and regulatory compliance. Enter good policy management practices.

Contact the iTech team today to discuss your bank’s challenges with financial fraud and cybercrime. Then, we’ll architect an innovative solution that reduces vulnerabilities, neutralizes threats, and minimizes risk in a way that aligns with your bank’s goals and objectives.