Alex Case, Senior Director, Government Industry Principal at Pegasystems, ex-senior civil servant at 10 Downing Street and the UK’s Cabinet Office, walks us through protecting against public sector fraud with technology
Local and national governments are under immense pressure to show that grants make a valuable difference in their communities’ lives and are not being misused in any way. Grants from the public sector can be used in a number of different ways, from research and innovation to infrastructure projects to helping charities, businesses, communities, and individuals.
However, it is clear that where there are public grants, there is fraud. This came to the forefront during the COVID-19 pandemic. The National Audit Office (NAO) found that the amount of fraud reported in the accounts they audited rose from £5.5 billion in 2018 to £21.0 billion, two years after the pandemic, which highlights a continuing trend.
The process of controlling grant fraud is difficult, expensive and time-consuming, but it is vital. So, how can public sector fraud be protected with AI-driven technology?
The current fraud prevention process
At the moment, manual processes are in place that are hard to navigate and often duplicated. Processing grants is a time-consuming practice in itself, and the need to protect against fraud adds another layer of complexity and hidden costs.
This is made even worse with internal silos and legacy systems, which are riddled with inefficiencies. Due to this, it may also mean that fraudulent grants may be paid out before it is flagged through manual means. This, therefore, creates more work for civil service staff as they would need to recoup money lost from the fraud, which is a tough task.
Rethinking the grants management process
Through modernising the grants management process, there are opportunities for growth, not just in one region, but across the country.
One way to develop this process is to create a connected data platform, leveraging AI, automation, and big data analytics across systems. Through creating one uniform platform means that there is a solution at the centre of government which can be applied across departments. It is important to build this system with a focus on easy usability and, importantly, transparency. This is a high-speed way to modernise the full grants management lifecycle.
Further, by automating lower-level processes, such as updating applications, processing grants, and checking financial details, civil servants can spend their time on higher-value tasks and, quite frankly, more interesting projects. The automation process also benefits civil service agents by lowering the burden on them.
Even though the platform will need to be tailored for individual departments to ensure alignment with compliance, it is much less work than starting from scratch multiple times. This will also reduce the degree of overlap and the number of systems that civil servants will need to work with.
Building an AI-driven and efficient grants management process
Data insights and automation can play a leading role in the fight against fraud by ensuring that the right appeals receive the correct amount of money and are going to the right people.
By leveraging a fully automated grant process powered by AI and big data analytics, the large data sets that government departments hold can be analysed, and fraudulent activity can be spotted before payments are made. To go even further, layering this with automation ensures that the system is instantly responsive to the findings of the fraud process and can stop the claim from being paid out.
In practice, the banking sector has already gone through a transformation project, like the one needed in the public sector. The banking industry had similar challenges, such as having large amounts of customer data, dealing with potential fraud, and the need to modernise their operations. Many in the sector opted for lift and shift tactics, which proved to be successful in modernising their operations.
But to tackle fraud, AI has become integral to how banks work, leveraging know-your-customer (KYC) practices. As such, the public sector can learn from banking, especially how the industry has used technology to reduce the burden on its staff, automate repetitive tasks and how they have deployed counter-fraud measures.
Reducing public sector fraud can lead to increased trust in public services and the sector as a whole. By relying on a connected platform and reducing internal siloes, there will be a great deal of transparency throughout the entire grants management process. With these AI-driven tools, from submitting the initial claim to paying out, the process can become much cheaper, more efficient, and, importantly, free of fraud.
