How to embrace the power of compliance automation

Over the last few years, we have witnessed the first phase of a much-needed transition in the approach to financial regulations in Europe. Thanks to the newly introduced requirements, the financial sector has finally started moving from a mostly paper-based understanding of the compliance function to one better suited to address the challenges of the 21st Century.

In this new environment, the role of compliance is becoming even more strategic, as risk professionals’ knowledge of regulatory requirements are being sought after to ensure business processes and IT implementations are compliant and cost-effective. To maintain organisations’ competitive advantage in a world of growing operational costs, compliance teams’ expertise is increasingly fundamental to shape business processes from the very beginning, finding solutions that are both efficient and fully compliant.

At the same time, increased user expectations are leading more and more financial institutions and, as the requirements expand to more sectors, organisations in general, to turn to automation. Automation’s strength is its ability to quickly and consistently scale the efforts needed to enforce compliance procedures across different organisations and geographies in a way that limits frictions in the user journey. This is a fundamental ingredient for commercial and operational success in the era of growing financial regulations and more demanding customer expectations.

THE TIME FOR COMPLIANCE AUTOMATION IS NOW

Embracing the power of technology and automation is a process that always takes time and effort, whichever department or organisation it involves. When the digital transformation journey is embarked on by multiple stakeholders and the risks associated with getting it wrong are extremely high, the complexities increase. However, this should not be used as an argument for further postponing such implementations.

The recent changes in regulations, together with the steep penalties and reputational damage caused by non-compliance, make the traditional manual approach to KYC/AML and customer onboarding not financially viable anymore. As hard as the implementation journey can be, compliance technology and automation solutions have the potential to rapidly scale compliance teams’ efforts while future-proofing the overall business.

THE GROWING REGTECH MARKET

The RegTech industry specialises in providing regulatory technology solutions to organisations looking to reap the benefits of automation. It is a fast-growing market; according to FinTech Global, 2018 was a standout year for investment in RegTech companies, with more than $2.5bn being raised in the first six months of the year. To put the figure into perspective, the sum equals 87.2% of the total capital raised by RegTech companies in 2015, 2016 and 2017 combined.

As the number of available options grows, compliance teams should thoroughly investigate which vendors offer the solutions that are best suited to address their specific challenges, while also providing the following:

• Flexibility. This is key to adapt to new regulations as they are introduced or as the organisation expands into new markets;
• Ability to integrate multiple legacy systems. Harmonising multiple systems through a dynamic solution is fundamental to ensure the success of any digital compliance strategy;
• Seamless customer experiences. As consumers’ expectations evolve, so should the customer onboarding experience that organisations are able to deliver.

Times of transitions rarely come without challenges, but by embarking early on the digitisation of their KYC/AML and onboarding processes and partnering with the right RegTech provider financial institutions can start reaping the numerous benefits of automation.

At Know Your Customer, we specialise in providing scalable, flexible and dynamic onboarding solutions for financial institutions that are serious about compliance. Our technology enables organisations to simplify their approach to customer onboarding and replace time-consuming manual processes and disconnected systems that put their business at risk.

Our horizontal, end-to-end approach to KYC compliance enables organisations to centralise the four pillars of KYC lifecycle management within one solution. These include:

1. Document Collection
2. Data Assessment
3. On-Going Monitoring
4. Reporting & Analysis

For an analysis of the impact of recent EU Regulations on the compliance function, make sure to download our white paper on the topic here.