Why mid-sized financial institutions find success by combining fraud and AML tactics

Banks and credit unions across the U.S. are under pressure. Fraudsters are deploying sophisticated new tactics to scam victims and then launder their ill-gotten gains. Compliance and anti-financial crime budgets are getting leaner.

AI brings much to the game for efficiency, but technology systems are outdated, and the AI opportunity isn’t easy to realize.

But one area where mid-sized banks in particular are reporting wins is in the convergence of fraud and anti-money laundering approaches.

New research from Hawk and Celent found that 53% of U.S. mid-sized banks are actively consolidating their fraud and anti-money laundering (AML) operations. Another 40% have some level of convergence in place.

Those that have already converged these two areas cite over $5 million in annual savings, which explains why no institution surveyed showed no interest in making the shift.

These significant improvements can have an enormous impact on an organization, delivering efficiency, speed, and accuracy—and forward-thinking teams are already putting them into practice.

A case for convergence

Fraud and AML teams often view the same activity through different lenses, lending themselves to potential convergence. By merging operations and systems, banks eliminate duplication, while reducing missed threats and aligning risk signals. Nearly two-thirds (60%) of institutions have undergone some level of convergence in their AML and fraud processes, while 56% have integrated at least part of their supporting technology and systems.

Consolidation of these functions allows banks and credit unions to streamline investigations, reduce false positives and close detection gaps, improvements that can help redefine how an organization manages financial crime risk. Two-thirds of surveyed FIs cited increased operational efficiency as a top benefit of convergence, while 53% pointed to a lower total cost of ownership. These outcomes aren’t just operational wins they’re proof that convergence can create a more sustainable model to future-proof businesses.

Why the payoff motivates this combination

The financial gains of FRAML are compelling: Our report shows that 77% of respondents expected to save over $1 million in the first five years of convergence, while those that have already completed the journey reported even greater returns. More than half cited savings topping $5 million annually.

These cost savings are key, and stem from fewer duplicative systems, less manual intervention and investigations, reduced alert fatigue and the elimination of overlapping team responsibilities. In fact, 63% of mid-size FIs cited analyst staffing as a major challenge they’re facing—further reinforcing the value of eliminating inefficiencies through convergence.

By investing in integrated programs that deliver with more precision instead of isolated systems, banks can maximize their ROI in an environment where operational budgets are under constant strain.

How convergence can unlock AI’s potential

AI is driving efficiency and effectiveness across the financial services sector. Fraud prevention and compliance are just two.

The true effectiveness of AI is highly dependent on the quality, and connectivity, of the data that underpins the technology. And this is where convergence becomes critical.

When banks unify fraud and AML, they create a more complete view of customer activity and risk, allowing the AI models to function more accurately. This results in higher detection accuracy, faster investigations, and the ability to uncover threats that traditional systems may have missed.

Convergence can turn AI from a buzzword into a true business advantage.

The challenge

While convergence has clear benefits, it is not without its own set of challenges. Many institutions struggle to make the business case—83% of respondents cited leadership buy-in as the biggest hurdle, and more than half noted difficulties demonstrating immediate ROI.

Part of the challenge is the misconception that convergence is simply “bolting together” fraud and AML systems. Successful convergence requires a unified strategy, shared data infrastructure, and the proper systems that can balance real-time responsiveness with long-term analysis. Without the right platform in place, integration becomes slow, complex, and expensive. That’s a hurdle that mid-market firms cannot afford to face.

Siloed data remains a major barrier for 30% of institutions, underscoring how without shared access, even the best detection tools will fall short of expectations. Banks that will find success will use technology to bridge these gaps, and harness platforms that provide flexibility.

True leadership means backing the solutions that move institutions forward, not only for quick wins, but to build more resilient systems for the future.

Looking ahead

Converging fraud and AML systems is more than just a tactical decision that can be made at the technology level. It is a strategic move that requires senior buy in to position firms to stay ahead of financial crime while maximizing operational efficiency.

For mid-sized banks in particular, there’s a rare opportunity to lead rather than follow on the heels of enterprise banks. The institutions that act quickly and with clarity will stand out and set a standard for what future-ready financial crime programs look like across the industry.

For C-suite executives, the choice is clear: convergence is no longer optional. It’s already happening. And for those who are ready to commit now, the rewards—operational, financial, and technological—will only grow.

Tobias Schweiger is CEO and Co-Founder at Hawk.