Transaction Monitoring Market Trends

Growth Drivers

• Rise in digital transactions: The volume and complexity of digital transactions are rising in tandem with firms' and customers' growing reliance on online and mobile platforms. According to the World Bank in 2022, 2/3^rd of adults globally now receive or make a digital payment. Transaction monitoring is pivotal in digital transactions to find out and prevent financial crimes such as tax evasion, embezzlement, terror financing, bribery, and corruption. These factors are fueling the growth of the transaction monitoring market during the assessed time.

• Surge of cryptocurrencies and blockchain transactions: As digital currencies gain traction; the market is experiencing a surge in demand for solutions that can effectively track and analyze blockchain transactions. For instance, the World Economic Forum projects that 10% of the total global GDP could be stockpiled and tokenized on the blockchain by 2027. Transaction monitoring accumulates and combines both off-chain and on-chain data and identifies associated risks.

• Helpful in fulfilling regulatory compliance: Various financial institutions are required to collect and scrutinize data on deposits, withdrawals, etc. Anti-money laundering transaction monitoring is important to review customer transactions accurately and ensure compliance. In case of non-compliance, the government imposes penalties on the banks. For instance, the Consumer Financial Protection Bureau (CFPB) in July 2023 stated that Bank of America would pay USD 100 million to the consumers as a refund and USD 150 million in penalties to CFPB. Banks are adopting transaction monitoring tools to avoid such incidents.

Challenges

• False positive and alert fatigue: Transaction monitoring systems often produce false positives, triggering alarms for legitimate transactions. When investigators have to shift through numerous false alarms, they may become fatigued, diverting their attention from real case threats.

• Privacy concerns: The utilization of transaction monitoring tools poses a privacy threat to the users. Transaction monitoring can invade privacy by gathering vast amounts of personal financial data.