Transaction Monitoring: What is it?
Transaction monitoring, also known as business transaction monitoring (BTM) or business transaction management, is an IT process that evaluates transactions in real time. BTM allows for the studying, analyzing, and administering of individual transactions flowing across the application infrastructure.
BTM As a Tool
Transaction monitoring may be used to measure performance management and failure management. Performance management tracks the flow and response time of any given transaction, providing an operations team with the exact data needed to diagnose performance lag. Failure management uses BTM to provide insight as to where the performance data slowdown is occurring, while offering visibility into the infrastructure tiers and rapidly locating the root cause of the issue.
Transaction monitoring enables alerting, detection, and remediation of varying types of unexpected business or technical conditions. Through the use of BTM, an operations team can search for transactions based on message content and context. Examples of searchable characteristics are arrival, message type, or client credentials. The search capabilities provided by transaction monitoring give application support teams a way to troubleshoot issues common in business transactions. Stalled transactions, application exceptions, faults, missing steps, boundary conditions, and incorrect data values are all common problems that can be solved by using BTM.
Another advantage to transaction monitoring is that BTM tracks in real time and IT personnel can track the root of the problem quickly, before the customer gets disgruntled. Customer retention is key and with transaction monitoring and with BTM fewer customers are lost due to failed transactions. Transaction monitoring can also redirect traffic via routing or loud balancing, enabling a more customized system.
BTM Users
Business transaction monitoring is most effective for organizations relying on distributed applications, including cloud-based systems. Some examples of business applications supported by BTM are insurance claims processing, account provisioning and activation, and operations support services (OSS). The need for transaction management isn’t specific to any industry and could benefit entities in most any realm.
AML Transaction Monitoring
AML transaction monitoring is a process designed to identify and defend a financial institution from any transactions that may lead to money laundering or terrorist financing. The transactions monitored in AML are generally cash deposits and withdrawals, ACH activity, and wire transfers. If money laundering or terrorist financing is detected from any of those transactions, a Suspicious Activity Report (SAR) would need to be filed immediately by that institution. A SAR is a document filed with the Financial Crimes Enforcement Network (FinCEN) when a financial institution suspects or observes an incident of money laundering or fraud. Reporting these suspicions is required under the United States Bank Secrecy Act (BSA) of 1970.
A combination of daily transaction monitoring and a customer’s historical information and account profile can provide financial institutions with a big-picture analysis of a customer’s identity. This includes a customer’s potential risk levels and their predicted future activity.
Benefits of BTM and AML
Business transaction management, if done effectively, can reduce the overall amount of failed transactions, decrease the average time it takes to repair, and lower IT maintenance overheads. AML uses sanctions screening, blacklist screening, and customer profiling features to identify suspicious behavior. These transaction monitoring tools increase automation and give regulators and banking partners confidence as the monitoring system provides a clear audit trail of investigations.