SaaS adoption in the financial and insurance services sectors is projected to grow significantly, reaching more than $130bn by 2027, up from $54bn in 2022.
According to SymphonyAI, within financial crime prevention, cloud solution spending is expected to grow to 32% of deployment spending. To understand why so many financial institutions are embracing SaaS for anti-financial crime, let’s investigate its benefits.
SaaS employs a subscription model that minimises upfront costs. It offers a modern, flexible approach to software, allowing users to access it and their data via the cloud. Organisations can purchase seat licences based on their needs, facilitating rapid scaling and continuous upgrades. Importantly, SaaS software and data are accessible from anywhere with an Internet connection.
SaaS software is often off-the-shelf, designed to integrate seamlessly with other popular tools and products, ensuring user-friendliness and a great user experience (UX). The agile nature of SaaS means constant updates can be deployed by the provider, ensuring compliance with changing regulations and the rapid integration of new developments like generative AI.
Legacy software, used for years in anti-financial crime, is typically on-premises and specially designed for the institution using it. Data and backups are held on-site, which can limit flexibility and adaptability.
Legacy software often employs rule-based processes, making it inflexible and slow to respond to regulatory changes and industry movements. Additionally, maintaining these systems can become costly as technology evolves and programmers for older languages become scarce.
Using SaaS in financial crime prevention offers several distinct advantages over traditional software.
In financial crime prevention, data security and privacy are paramount. SaaS solutions provide robust security by leveraging the capabilities of companies like Microsoft, Amazon, or Google. These providers have extensive security systems and dedicated teams, reducing the risk of breaches. In contrast, legacy systems often have less frequent updates and smaller security teams, making them more vulnerable to attacks.
SaaS applications are designed to integrate easily with other third-party tools, including legacy systems, ensuring a seamless operation essential for effective financial crime prevention. This approach allows financial institutions to leverage the latest technology without overhauling their existing systems. Legacy software, however, often requires significant resources to maintain compatibility and productivity.
Criminals use the latest technology to commit financial crimes. To combat this, organisations must use advanced SaaS solutions that incorporate generative AI, predictive AI, and machine learning. For example, SensaAI for Sanctions uses unstructured data and provides contextual insights. Legacy systems lack these capabilities and require significant upgrades to remain functional, leaving institutions vulnerable.
Cloud-based SaaS software allows organisations to provide access to their data and software from anywhere in the world. This is particularly beneficial for remote workers, eliminating the need for physical server access. SaaS enhances workplace agility, ensuring quick and effective financial crime prevention.
Legacy financial crime prevention software often does not scale well. SaaS solutions, however, are designed for easy scalability, meeting the demands of growing organisations. As businesses expand, SaaS can accommodate increased needs seamlessly. This flexibility is crucial for financial institutions looking to adapt quickly.
SaaS offers a subscription model with lower upfront costs and less need for in-house maintenance. This results in a better return on investment compared to legacy software, which often has higher initial costs and ongoing maintenance expenses. Financial institutions can avoid the sunk cost fallacy by transitioning to SaaS solutions.
SaaS platforms offer a modern, user-centric experience, making it easier for teams to understand and use the software quickly. Training is simplified, and the technology caters to users with disabilities, unlike older legacy systems that often prioritised functionality over user experience.
Maintaining legacy software requires significant resources and expensive service contracts. In contrast, SaaS providers offer continuous support and maintenance, often available around the clock. This ensures systems are always up-to-date and operational, with quick resolutions to any issues.
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