Commerzbank, Deutsche Bank and German Savings Banks Association establish joint venture to combat financial crime
Commerzbank, Deutsche Bank and the German Savings Banks Association (DSGV) are establishing a joint venture to combat financial crime. The newly established joint venture aims to enable its customers in the financial sector, particularly financial institutions, to securely, consistently and lawfully share relevant information on cases of fraud. “In doing so, the three shareholders are creating a common foundation for the cross-institutional, data protection-compliant exchange of information, with the aim of detecting fraud at an earlier stage.” – according to the press release.
Financial crime does not stop at institutional boundaries. Perpetrators frequently use accounts at multiple banks and transfer funds between different institutions within a short period of time. Individual banks have so far generally only seen part of the overall picture. The joint venture’s product solutions are intended to facilitate accelerated sharing and exchange of information identified as relevant.
First product focuses on fraud prevention
The first specific use case is the prevention of types of fraud such as phishing, investment and merchandise fraud, or love scams. The application is already at an advanced stage of development.
If, for example, a financial institution identifies an account that is being used fraudulently, it can make the corresponding information available to other institutions via the shared platform. They can then take these findings into account in their own fraud prevention activities. This makes it possible to identify suspicious activities at an earlier stage and initiate appropriate protective measures.
The assessment of the information provided and the decision on specific protective measures always remain the responsibility of the respective institution. Cryptographic methods such as Multi-Party Computation (MPC) are used for the technical implementation. They enable the comparison of specific information without requiring the participating institutions to disclose all underlying data. In particular, data protection, purpose limitation, data minimization and controlled disclosures are key components of the planned solution.
From the first application to a shared infrastructure
Fraud prevention is the first step in a broader development. Building on the first application, the shareholders plan to gradually expand the shared infrastructure.
Going forward, the offering is therefore intended to be expanded to include further components around fraud prevention as well as compliance-related applications. In doing so, the joint venture also reflects the continued development of the European legal framework. New requirements in the area of payments concerning the exchange of information between financial institutions in the fight against fraud and money laundering will create additional opportunities for closer cooperation.
The joint venture’s offering is aimed at financial institutions and other obliged entities
Existing solutions as well as solutions developed in the future are also intended to be made available to other obliged entities as customers of the joint venture. With each additional participant, the information base grows, as does the potential benefit for all parties involved.
In this way, the shareholders aim to promote the broadest possible cross-sector cooperation between obliged entities. The joint venture’s offering is intended to complement existing governmental and supervisory measures to combat financial crime, not to replace them.
Statement of the founding partners
Bernd Spalt, Chief Risk Officer of Commerzbank:
“Financial crime is becoming increasingly professional and does not stop at company boundaries. That is why it is right for us to work more closely together in this area and pool our experience and capabilities. Ultimately, what matters is that we identify risks earlier and effectively protect our customers.”
Dominik Hennen, Head of Personal Banking at Deutsche Bank:
“Fraud can be contained more effectively when banks can securely share relevant findings with one another in a legally compliant manner. With the joint company, we are combining intelligent data use, modern technology and industry-wide cooperation. In this way, we aim to better protect our customers and set new standards in fraud prevention.”
Joachim Schmalzl, Executive Member of the Board of the German Savings Banks Association:
“We are putting fraud prevention on a broader footing and opening up the collaboration to other banks as well. After all, security in payments is not a matter of competition but a shared responsibility of the banking industry.”
