Interview with Eric Wagner – Head of Group Financial Crime and leading the setup of the Compliance Advanced Analytics Platform for Erste Group.

Erste Group is one of the largest financial services providers in Central and Eastern Europe, which has almost 15.7 million customers and over 2,700 branches across seven countries. Eric is an IT and a regulatory expert with strong interest in transformation programmes, AI, distributed ledger technologies and quantum computing. He is also a firm believer in sharing knowledge and developing highly effective teams who can take on the challenges of financial crime both internally and across borders.

Please note that the comments expressed in this article are Eric Wagner’s personal views and are in no way associated with his current employer nor any of his previous employers.

 

How are you coping under the current restrictions?

I’m well set up to work from home, but I can’t say that it is easier than being in the office – most of my days are back to back online meetings and while it’s great to have the technology to enable this, actually being with people can be less exhausting and more engaging. The main break I have is to help my daughter with her homework and this also enables me to spend a short amount of time outdoors, such as when she was practising parkour for her school PE project.

Tell us about your journey into your present role – how did you come to work in this area?

I studied business administration and computer science at the University of Vienna and after I graduated, worked initially in IT for IBM and then moved to Accenture, where consulting allowed me to gain a broad range of relevant experience. I then took on an IT and later compliance role for the Austrian bank, Raiffeisen Bank International, which meant I could really start to understand financial crime and to join up the dots. I then moved to my present role, almost four years ago, where my focus has been to initiate the transformation of processes and break down of silos – there has been change, and there is a growing realisation and cultural shift that we can’t make real progress if attitudes are stuck in the past century.

What would you like to see regulators focus on? Are there aspects of regulation you find frustrating?

Clearly the big problem are the rules around not sharing data – if you want to fix something, you need to see the whole picture. I will continue to push for change in this area. Criminals are well aware of the limitations we have and exploit this for their benefit. Regulators need more insight into how criminals operate and to ensure that their rules are relevant – some are not agile enough and there are times I feel they are struggling to catch up. There has been too much emphasis on recruiting lawyers within regulators in the past, but they should take the next step and hire data science professionals, like f.ex. at the Swiss FINMA or the UK FCA or few others, who can bring start to really embed machine learning. I believe strongly in the benefits of sharing knowledge and have a wide membership of various industry bodies to further this.

Reports have shown there is a spike in COVID-19 fraud. What are your thoughts on this?

Absolutely, we are seeing a spike in scams, and there are waves of phishing right now targeting consumers. Push payment fraud is also an ongoing concern, with individuals and businesses being pursued by criminals who can be quite sophisticated in the ways they try to obtain money transfers. They are getting better at mimicking customer behaviour and will always look for the weakest links – they are also helped by the fact that money can now be transferred so quickly. Banks cannot always cover losses for which they were not responsible, but this is not always the case elsewhere and I’m aware there can be more discretion in the UK for example. It is a very difficult situation and we want to encourage customers to be on their guard and to take reasonable responsibility as well as ensuring there is strong protection. Clearly this matters more than ever now, but these scams are not going to go away when the COVID-19 crisis is over.

What are the biggest financial crime threats facing organisations? Do you feel technology is now proving more effective in combating the threat?

We have seen the damage from some of the biggest ransomware attacks for businesses large and small – and that includes healthcare sector we are facing a constant threat. Certainly, there has been progress in terms of our response, but we can never be complacent. I think that some of the claims around Artificial Intelligence go too far but it is an area that interests me and I believe with banking, in particular, we can certainly do a lot more with it and particularly within fighting financial crime. We are less tied to legacy systems now in terms of the solutions we use and can also learn from some of the innovation going on in the FinTech sector.

Do you feel there is a shortage of people with the skills to tackle financial crime?

There are but there are also many opportunities, so we need to get the right messages out about these. We also need the right skill sets and that means a move away from traditional backgrounds such as legal – we have recently recruited two data scientists to work in Compliance, for example, and this is working well. We also need to ensure people feel valued – staff do not just want to be producing SARs (Suspicious Activity Reports) if there is no conclusion or recognition. Overall, I think there are some exciting times ahead and if we can overcome some of the restrictions around sharing information then we will see progress and there will be benefits all round.

Is there a particular piece of technology that makes your life easier?

I’m a visual guy, so anything that makes data graphic appeals and I obviously value security so being able to work securely via a VPN or on Cloud Infrastructure is important. I am also making far more use of meeting collaboration software such as Google or Microsoft Teams – we may be having to work remotely, but this helps us stop feeling like we’re in a bubble.

 

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