A panel of industry experts at the Sibos 2024 conference on Tuesday discussed the critical role of data sharing and fraud detection in the modern financial landscape.

As CFOs navigate an increasingly complex and interconnected world, understanding how to leverage data effectively can be a game-changer in mitigating risks and safeguarding financial institutions.

One of the key themes that emerged from the panel was the power of collaboration during one panel discussion, reports Finextra. By sharing relevant data, financial institutions can create a more comprehensive view of potential threats and identify emerging fraud trends.

This collaborative approach can help detect and prevent fraud more effectively, ultimately protecting institutions and their customers.

However, due to existing privacy laws and regulations, banks remain hesitant to share financial data. If data is shared, it is done via lateral agreements. The approach, while available today, has its limitations. From a technology perspective, relying on lateral agreements doesn’t scale well, and participation is entirely voluntary.

But something must be done and soon, said Sergio Antonio Dalla Riva, head of GTB product development solutions at Intesa San Paolo. “Hesitation is causing fragmentation and the fraudsters are laughing.”

Advanced technologies such as artificial intelligence (AI) and machine learning (ML) are increasingly crucial in fraud detection. These tools can analyze vast datasets to identify patterns and anomalies that may indicate fraudulent activity. By leveraging AI and ML, financial institutions can automate many aspects of fraud detection, freeing up resources for more strategic initiatives.

Data sharing and a technological initiative like SWIFT’s Federated Learning AI initiative, launched at last year’s Sibos, could provide the critical mass for an industry-backed solution.

While the benefits of data sharing are significant, it’s crucial to address the privacy concerns associated with handling sensitive information. The panel underscored the importance of robust data governance and security measures to safeguard customer data. This includes implementing strong encryption protocols, conducting regular risk assessments, and adhering to relevant regulations.

“The skeleton in the room is the concern that this data falls into the wrong hands…privacy is a key element,” said Michele Gentile, head of group correspondent banking, APAC, UniCredit, during the panel discussion.

By embracing collaboration, leveraging advanced technologies, and addressing privacy concerns, financial institutions can fortify themselves against the ever-evolving threat of fraud. As the financial landscape continues to evolve, the ability to effectively utilize data will be a critical factor in ensuring long-term success.