Data security is a major concern for AML software solutions. Data stored on both premise and cloud can be affected by security breaches. The cloud-based deployment mode has faced several cases of security breaches, resulting in consumer reluctance toward its adoption. The use of infrastructure that helps in data protection and recovery can provide a viable solution to the problem. Breach of security can lead to the leakage of confidential information, which can, in turn, affect the financial institutions as well as other users associated with the institutions. Although firewalls and anti-viruses provide a solution to on premise data security, this additional software meant for protection might not be reliable and can turn out to be risky, in some cases.
Moreover, in digital transaction, the security of the transaction over the network becomes critical. During digital transaction, where the electronic documents are transmitted over the network, the risk of involvement of unauthorized users and external hackers also increases. In case of the BFSI sector, financial data are more vulnerable over the networks and cyber security becomes the main concern for the service providers. Moreover, breaching of financial transaction can create more complications for consumers as well as banking service providers. According to the industrial facts, most of the digital transactions have been cancelled due to increase in suspected scams. Therefore, increasing cyber threats is expected to restraint the growth of the anti-money laundering software market to some extent.
The key concept of cognitive computing is making automated systems understand the user inputs. Digital assistants to manage extensive structured, unstructured, and personal data are useful applications of cognitive computing, which is continuously improving. Such software helps humans to perform activities that were not possible a few years back from 2020. Cognitive computing’s key benefit is the ability to enhance assessment of AML software risk portfolios. The technology provides information, such as data used to build client or consumer profiles, in a natural and timely way. The technology also makes evidence-based determinations, assesses vast amounts of data, evaluates multiple options and their connections, and provides new outcomes and actions.
Due to the COVID-19 pandemic, many developed and developing countries are facing complete or partial lockdown situations from March 2020, affecting the operation and supply chain of companies in multiple industries. Further, there is a significant uncertainty in the macroeconomic factors across the globe, resulting in economic instability, political unrest, decline in information technology operations, and restriction in government budgets, which might lead to delay or even cancellation of procurement contracts. Such factors have largely disrupted various vendors’ operations and negatively impact their business in both the cyber intelligence market and the customer engagement market.
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On March 11, 2020, COVID-19 was declared a pandemic by the World Health Organization (WHO), followed by lockdown or emergency situations in many countries for a long time. Such a scenario has subsequently affected the financial conditions of the companies, including the impact on their partners’ customers and associated vendors, owing to the unwilling nature of the partners to renew the contract in the COVID-19 situation. Also, many companies generate their revenue from contracts with different government financial institutions, including international, national, and local agencies. Hence, their business sales could also get impacted negatively.
Technological advancements in financial services have resulted in an increase in the number of wired transactions worldwide. However, these smooth and prompt transactions have exposed the financial institutes to the risk of money laundering. For instance, in 2013, the U.K. established National Crime Agency (NCA), which ensures to cut down crimes such as money laundering by monitoring high-end customers, including lawyers, investment bankers, and accountants. Furthermore, Basel Institute on Governance, an independent, not-for-profit competence center in Switzerland, published the Basel AML Index for 2018, covering XX countries. The index signifies risk ratings based on the quality of a country’s framework for countering terrorism financing and AML.