HSBC has transformed its proprie crime-spotting software into a new offering looking for new business opportunities.
Seven years ago, the bank failed to spot that it was being used by Mexican drug cartels for money laundering. As part of its settlement with US authorities, it was forced to invest millions of dollars into compliance and better security solutions.
Now, one of those solutions is being used to earn extra money. It does so by pulling data on the bank’s current customers. It looks for banking activities and it maps customers’ and companies’ ties to each other, looking for unusual patterns. It cross-references this data with public information on company ownership and directorship.
All of this has made the company earn “hundreds of millions of dollars” in additional revenue, without going into detail how much money that actually is. It also freed some 400 people from repetitive tasks and allowed them to work on client-facing roles.
“It’s one of the first commercial uses of investment in financial crime prevention, and the business we’re getting in this way is inherently lower risk and quicker to win,” said Stuart Nivison, HSBC’s global head of client network banking.
“We took our customer dataset and combined it with (Britain’s) Companies House data and turned the algorithm around to look for attractiveness in a client, whether that be through sector, growth of the company, and connection to existing clients,” Nivison said.
The tool has mapped 22.5 million entities and people in Britain. It needs three minutes to map out a network of connections which a regular employee needs three years to achieve.