UK Finance’s latest must–read blogs

The convergence of fraud, credit, and compliance: A growing trend amongst financial services in 2025?

In an era marked by increasing complexity, financial services companies are under continual pressure to meet their obligations – both to their customers and regulators.?

To meet this challenge, a growing and significant change in the structure of financial services companies has begun to emerge. The convergence of credit, fraud and compliance operations is becoming is becoming increasingly common in a centralised function.?

There is a critical need for integrated risk-management solutions and convergence should be a consideration for all businesses in 2025. What are the benefits of convergence and what problems does it solve??

The growth of convergence?

New research carried out by Experian with more than 700 financial companies across the world revealed a growing recognition of the increasing need to integrate fraud, credit and compliance functions.?

Three years ago, this was seen as desirable but elusive goal but just a year later a fundamental shift was identified, with firms starting to explore tools, technology and software that addresses both credit and fraud risk simultaneously. In 2024, more than half of companies (51 per cent) surveyed had already centralised their credit and fraud functions.?

Looking ahead, the trend will only become more common. The vast majority (91 per cent) of survey respondents predict the functions will become centralised over the next three, while 89 per cent believe there is close alignment between them and will improve efficiency and effectiveness of operations.?

The current challenge?

Financial companies are presented with multiple challenges in a typical decentralised risk management structure. Reducing credit and fraud losses, the lack of end-to-end automation and difficulty in integrating data from multiple sources and identifying emerging genuine fraud threats were all reported as significant issues.?

To deal with these issues, institutions are buying-in technology, on average using nine separate tools, with some using as many as 20, across an account opening journey. It is little wonder, then, there is appetite for solutions which bring the functions under one roof.?

Read the full blog by Keith Little, President Experian Software Solutions, Experian UK&I.?

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Complaints Outlook 2024: using complaints insight to shape the future of your approach?

Huntswood’s Complaints Outlook 2024, released in November, targets actionable insights and practical strategies for firms navigating the ever-evolving complaints landscape.?

This year’s edition represents a significant evolution in the help it provides to firms looking to unlock the true value of complaints management.?

In our previous edition, we looked at the emotional signatures customers display throughout their complaint's journeys. The findings were clear: customers who feel valued are more likely to develop genuine loyalty, advocate for brands and contribute to higher retention rates.?

Now, in the latest edition, we shift our focus to translating this understanding into actionable operational improvements, and ensuring insight derived from complaints drives tangible business outcomes.?

Read the full blog by Emma Mitchell, Director of Advisory Services, Huntswood.?

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Politically Exposed Persons in the UK – a stocktake?

How firms can get ahead of recent regulatory changes.?

The treatment of Politically Exposed Persons (“PEPs”) under the UK’s anti-money laundering regime has been in the spotlight over the past year. Recent changes to legislation and upcoming revised FCA Guidance means firms should be actively considering the effectiveness of their own frameworks for managing the risks associated with this category of customer.?

How did we get here??

The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (as amended) (‘the MLRs’) require the application of enhanced due diligence (EDD) measures to PEPs and their Relatives and Close Associates (RCAs). However, in an effort to mitigate the burden for PEPs with a lower risk profile, the FCA’s 2017 guidance specified that PEPs “entrusted with a prominent public function in the UK should be treated as low risk, unless a firm has assessed that other risk factors not linked to their position as a PEP mean they pose a higher risk.”?

Last year, the parliament took steps to codify the FCA’s guidance – amending the MLRs to state that the ‘starting point’ for any assessment of the risk associated with a domestic PEP is that they are lower risk than a non-domestic PEP.?

Separately, the FCA conducted a multi-firm review of practices relating to domestic PEPs. The review found room for improvement and reiterated the need for firms to treat PEPs fairly and in line with their Consumer Duty obligations. The FCA has also consulted on related updates to its 2017 guidance.?

What can regulated firms do??

The results of the FCA’s multi-firm review and recent experience provides some insights. The fundamentals of the UK’s PEP regime, as set out in the 2017 guidance, largely remain unchanged and the requirements in the MLRs must also still be observed. However, firms can act now to address any shortcomings and improve customer outcomes.?

Read the full blog by Simon Ward, Senior Manager, FS Forensic, KPMG UK and??

Rajni Johnson, Senior Manager, KPMG UK. ?

Banking on (Artificial) Intelligence?

The adoption of Artificial Intelligence (AI) in financial services is expected to drive significant growth and productivity in the industry.?

Though some of the hype around Generative AI (Gen AI) is cooling down, the business opportunities are real. According to research conducted by World Economic Forum, AI will add 14 per cent increase to global GDP by 2030, equivalent to a growth of $15.7 trillion! Another research by one of the global tech companies suggests that 750m new applications will be built in the next 2 years, many will use AI and drive productivity in all sorts of ways.?

Gen AI is already transforming multiple areas within financial services, with the top three use cases emerging in customer service, risk management, and software development. Large Language Models (LLMs) are proving particularly effective in tasks such as summarisation, content generation, classification, semantic search, code generation, and data extraction—leading to estimated productivity gains of up to 40 per cent.?

Generative AI can have a big impact in fraud detection. By analysing massive amounts of transaction data, AI can identify unusual activity and flag potential fraud before it becomes a bigger problem. Language models (LLMs) are especially good at working with text data, which means they can help financial institutions analyse customer feedback, review documents quickly, and protect sensitive information.?

Read the full blog by Prashant Jajodia, Managing Partner, Financial Services Sector Leader, IBM Consulting UKI. ?