With million-dollar fines threatening for non-compliance, banks of all sizes have learned to embrace anti-money-laundering and counterterrorist-funding software as a required tool for doing business.
Globally, investment in AML software, particularly in North America and Europe, is expected to hit $375 million by 2009, a compound annual growth rate of 5.9 percent over 2006, when spending was only $335.4 million, according to a new report from Celent. The highest growth of adoption is expected to be in the Asia-Pacific region.
Since Celent's first AML vendor report in 2003, the vendor landscape has gelled, according to Neil Katkov, group manager of Asia research, who authored the report. "Firms that then had only a few clients struggling to make the new technology work are now fixtures of the AML technology landscape," he wrote. "Vendors have significantly upgraded their systems, enhancing usability with Web-based interfaces, improving workflow efficiency with advanced case- management features, and plugging gaps in features and functionality. In an ever-more competitive market, newer entrants have been relentless in pursuing scalability in a bid to win sought-after multicountry deals from the big global financial institutions, while conversely the high-end system vendors are launching 'AML lite' versions of their software aimed at the emerging regional, small and mid-size financial institution market." Lite versions are offered by Mantas, NetEconomy and Searchspace. "They are sufficient for small banks, certainly," Katkov notes in the email interview. "Perhaps even more than a small bank really needs."
The report profiles 19 established and emerging vendors. Highest marks for transaction monitoring were earned by Norkom Technologies, Mantas and NetEconomy. For watchlist filtering, top scores were received by FircoSoft and Side International.
The report also profiles Accuity (owned by USB parent SourceMedia), Ace Software Solutions, ACI Worldwide, Actimize, ChoicePoint/Bridger Insight, Experian/Americas Software, Fortent/Searchspace, LogicaCMG, Metavante/Prime Associates, Northland Solutions, SAS Institute, STB Systems, Top Systems, and Wolters Kluwer Financial Services/PCi. The 19 vendors represent about 55 percent of the global market in packaged software for transaction monitoring and watchlist filtering products.
And, since time is money, Celent also considered how long each product would take to implement. The shortest period was for ChoicePoint/Bridger Insight, which can be installed in one hour at small institutions; the longest was Mantas, which takes between four and six months.
Katkov offers solid suggestions for banks weighing the options of each product: Consider the vendor's core competency; consider the vendor's natural target market; expect to commit internal resources, including IT and compliance-department time, to the search; expect implementation to take a long time; recognize the necessity of ongoing internal commitment for developing new rules and scenarios as they emerge (he estimates maintenance costs at five times implementation cost over a five-year period); demand ongoing vendor commitment; and don't expect the AML system to replace compliance personnel.
Moreover, due to the complexity of AML implementations, "buyers are definitely not advised to try out different vendors," Katkov warned. "Rather, [banks should] go through a close needs analysis and due diligence process on the vendors, including speaking with other users of their solutions."
