Given the exploding rate of innovation, there are now numerous ways to process data. Traditionally, batch processing was the method of choice. However, technological advancements and the rise in fraud demand a much more active system. This is where real-time transaction monitoring comes in. It allows companies to extract insights from data nearly instantaneously. Monitoring of transactions in KYC stands to benefit the most from real-time transaction monitoring. Whether it be the financial system or the logistics industry, applications are everywhere. Despite the monumental gain in processing speed, batch processing still has certain use cases. This blog aims to explore the difference between the two and explain where each might be more suitable.
Types of Processing
As mentioned, the recent advancements in technology, especially AI and big data, have been beneficial for data processing. Batch processing, near real-time, and real-time transaction monitoring are a few of the ways analysts use to process data. Primarily, it depends on the goals of the company and the tools to determine which method they choose. For instance, if an organization is fine with getting insights after a few days (or even longer), batch processing is the way to go. On the other hand, transaction monitoring excels when there is a need for quick results. ATMs are a prime example of this method. Similarly, near real-time transaction monitoring is useful when the efficiency is helpful, but results can take some time.
The scope of this blog discusses transaction monitoring and batch processing, as these are the predominant methods in the industry. Therefore, the following sections discuss the specific advantages of these technologies.
Real-Time Transaction Monitoring
In terms of data, real-time transaction monitoring requires continuous input and steady output. To be precise, the reaction of such a system to data should preferably be in seconds or milliseconds. Therefore, it is the perfect solution in time-sensitive environments. For instance, transaction screening is crucial in the banking and logistics sectors. Moreover, the rising fraud and identity theft cases now demand a stringent set of rules in place. This is why authorities worldwide try to crack down on illicit activities by enforcing strict policies. The Anti-Money Laundering Directives (AMLD) and Know Your Customer (KYC) policies are among the well-known of these rules. Therefore, organizations need a system to detect and identify fraud in real-time.
Real-time transaction monitoring can help organizations comply with these regulations while maintaining a robust payment screening process. Moreover, it also ensures customers get timely help. Usually, the customer remains in the dark in case of identity theft or spoofing. However, real-time monitoring of transactions will enable the company to notify them as soon as the attack occurs. In other words, this method allows organizations to use data as soon as it is available. Since data is the new currency these days, such capabilities are valued at customer-facing businesses.
Traditional Batch Processing
Batch processing, unlike real-time transaction monitoring, is not a time-sensitive process. Instead, it depends on the amount of data. Here’s a simplified version of the whole process to better understand what goes under the hood. First, the organizations enact systems to collect data. It can be done over a few days or even months. Second, the company enters the data into a processing system. It can be third-party software or an in-house algorithm. Finally, once the data is manipulated, the organization receives the insights as the output. Even though it is an incredibly powerful method, it can lag behind the modern needs of efficiency and swiftness.
Primary use cases of batch processing include the work on the archive and historical data. For instance, market basket analysis is a typical example of such processes. It allows organizations to understand consumer behavior over a period of time. However, batch processing is not a viable option in KYC monitoring. Regulatory authorities, such as GDPR and FATF, require constant monitoring of transactions, especially in finance-related organizations. Therefore, it is better to implement a system that complies with these regulations.
Final Verdict on Transaction Reporting System
Technology is continuously improving, and so are cybercriminals. Traditionally, criminals have outsmarted authorities using ingenious ways. However, now that AI is here, the tide has shifted in favor of companies. Real-time transaction monitoring is one way to keep an eye on illicit activities. Whether it’s money laundering or hacking attempts, these systems provide complete coverage.
On the other hand, batch processing is still a strong contender when it comes to data analysis. What it lacks in speed, it provides in a detailed analysis. However, the current world is more sophisticated than this choice. The best recommendation is to implement both methods in some capacity. Real-time transaction monitoring to provide instant customer care and comply with the policies. At the same time, batch processing is for gaining long-term insights.
