Regulatory technology and fraud prevention are two areas that financial institutions should be investing in now to reduce losses and overhead costs.  

As state and federal regulators increase the number of regulations that financial institutions need to keep track of, lenders can reduce overhead by implementing regulatory technology (RegTech), Rilla Delorier, a board member at Coastal Community Bank, said Tuesday at Finovate Spring 2023 in San Francisco. 

“I look at so many organizations — I call it human spackle — they throw people at processes,” Delorier said. “And if you look at the cost that’s going to risk and compliance … it’s almost like there’s a blank check that those departments can write to just hire a ton of people. 

“If you can automate that, think of how much additional investment can go into stuff that actually enhances the customer value proposition,” Delorier said.  

Lender Compliance Technologies, for example, provides automated compliance solutions such as the ability to track finance and insurance product cancellations and refunds.  

Fraud prevention technology should also be implemented sooner rather than later to guard against the rise in synthetic identity fraud, Mirella Reznic, executive vice president and chief strategy officer at Valley Strong Credit Union, said at Finovate.  

Point Predictive, for one, assists lenders in identifying red flags related to potential fraud and provides insight into how auto lending fraud is trending. Credit bureau companies such as Equifax also offer fraud prevention services for consumers, along with TransUnion company Neustar. 

“Fraud is a huge [problem] area, and it’s just getting worse,” Reznic said. “I don’t know if people are just bored and they decided to lead a life of crime, but that’s a big area.”

Editor’s note: This article first appeared on Auto Finance News, a sister publication to Bank Automation News.