A simple but significant concept that’s critical in the financial industry is knowledge fabric, otherwise known as a series of knowledge graphs strung together to surface business insights. Simply stated, knowledge fabric allows financial institutions (FIs) to enhance know-your-customer (KYC) and financial crime compliance.
To create a knowledge fabric, which can be defined as entities including people such as employees and customers, places, and things, a series of knowledge graphs are amalgamated. But is there one part of knowledge fabric that provides deeper insight regarding financial crime compliance and allows FIs to better understand their customers?
The “place” portion of a knowledge fabric, which is where place data/intelligence is derived, is especially useful in identifying relationships, discovering insights, and enabling risk management functions. An example in a recent IDC whitepaper, sponsored by Pitney Bowes titled Digital Transformation and the Need for a Knowledge Fabric, November 2019, presents a scenario where a tenant of a small business is a marijuana- related business. They then pose the question: would it be important to the FI overseeing the small business to know the purpose of this tenant’s business? Could there be a compliance issue related to the small business by accepting and depositing the tenant’s rent?
According to the whitepaper, “In this example, gaining insight as to the types of businesses [in connection with the FI] would provide intelligence to develop a more accurate risk assessment of the customer. The knowledge fabric, with enriched place data, provides FIs an ability to proactively surface risk and compliance issues. Place data enables connections between people, places, entities, and things that could not previously be connected.”
By channeling the information provided by place data, FIs can drive down false positives in the screening process, reduce operating expenses by as much as 39 percent, and identify suspicious transactions up to 49 percent faster. What other positive impacts can place data make in helping FIs KYC and adhere to financial crime compliance?
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