HSBC using fraud-detection tool to reach new business opportunities

HSBC using fraud-detection tool to reach new business opportunities


British bank HSBC has converted a financial crime detecting algorithm, which it was forced to develop in response to a money laundering scandal, into a system that can proved to be creating new business opportunities, said the bank executives.

In order to flag desirable prospective clients to HSBC staff and to pave ways in connecting them through relationship currently existed with the bank, the algorithm will combine data related to banking activities of clients with public data of company’s owners and directors.

HSBC is in broader strategy of pulling more out of its larger client data and physical network to put efforts and actually generating more of the revenues being part of it, which is also the main concern of interim Chief Executive Noel Quinn, and to achieve that goal, HSBC is making use of available data and artificial intelligence.

It is one of the first uses of investment in a fraud prevention system at commercial level and we are entering into essentially a low risk and easy to win business, said Stuart Nivison, HSBC’s global head of client network banking.

Though, HSBC declined to share its revenue generation expectation from the new system but said that broader program of network income has already yielded hundreds of millions of dollars for the bank in shape of additional revenue.

In the United States in 2012, HSBC settled with authorities for $1.9 billion over its failure to prevent money laundering by drug dealers through its Mexican unit, and part of that settlement was imposition of a condition of investing hundreds of millions of dollars to comply with financial crime regulations.

The system maps ties of companies and individuals with other and then search for any unusual transaction patterns or detect unknown links between those entities that was not known previously.

The moment was groundbreaking when HSBC realized that the system could be used to target “green flags” of potentially attractive clients rather using it to focus on “red flags”, Nivison said.

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She is the Managing Editor for in-depth discussions and analysis as well as breaking news at Markets Morning. She works closely with Editor-in-Chief Zac Berry on content and publishing initiatives for the site. Brianna Clemons has worked as a financial journalist and editor since 1997. She lives in Bucks County, PA, with her husband, four young children and one dog.