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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.

Benefits of convergence

The convergence of credit, fraud and compliance brings multiple benefits:

1. Improved risk-management: Centralising these functions enhances the overall effectiveness of risk management. By integrating fraud detection with credit risk assessment and compliance checks, financial institutions can achieve a comprehensive view of potential risks, leading to better decision-making and reduced losses.
2. Operational efficiencies: Convergence leads to streamlined processes and workflows, improving operational efficiencies. This, in turn, results in cost savings and a more agile, flexible response to emerging threats.
3. Enhanced data integrity: Integrating data from fraud, credit, and compliance functions ensures greater consistency and accuracy. This improved data integrity supports more reliable risk assessments and compliance reporting.
4. Cross-team collaboration: Centralising these functions fosters greater collaboration across different teams within the organisation. This collaborative approach enhances the organisation's ability to protect itself against a wide range of risks.
5. Regulatory compliance: A unified approach to fraud, credit, and compliance helps financial institutions meet regulatory requirements more effectively. This is particularly important in an environment where regulatory scrutiny is intensifying.

Steps to implement convergence

Successful convergence may appear to be an outlandish ambition, but technology and software is already making the process easier than ever before, enabling greater automation and data integration. Some steps businesses need to consider as they embark on this journey include: 

1. Strategic alignment: Ensure that the convergence strategy aligns with the overall business objectives and risk management goals.
2. Cultural integration: Foster a culture of collaboration and shared responsibility across fraud, credit, and compliance teams.
3. Technology investment: Invest in integrated technology solutions that support end-to-end automation and data integration.
4. Data management: Develop robust data management practices to ensure the accuracy and consistency of data across all functions.
5. Continuous improvement: Regularly review and refine convergence strategies to adapt to changing threats and regulatory requirements.

The convergence of fraud, credit, and compliance functions is already happening and it is a trend that will likely continue over the next years as financial companies look to a centralised structure. 

An integrated approach offers significant benefits, including improved risk management, operational efficiencies, enhanced data integrity, and better regulatory compliance. Financial institutions that embrace this convergence will be better positioned to navigate the complexities of the modern financial landscape.