Facing the Music!
Since the banking crisis there has been a strong focus on legislation and regulation within the industry and firms have been forced to assess their operations and data management systems and focus more on their customers and the risks to their business. Some banks have been subjected to heavy fines from the regulators when they have not followed the correct processes for auditing their new customers and their ongoing customer relationships.
The cost burden and complexities involved in compliance, plus the fear of falling foul of the regulators have all become drivers for organisations reassessing their current data management processes.
Readdressing the balance
With regulations and legislation changing both locally and globally, and variations taking place in the markets as firms expand into new regions; investment banks and brokers are being forced to review their processes. Historically firms have been onboarding their clients in a variety of ways, which can lead to a fragmented approach. Frequently this involves laborious, manual processes and often results in administration silos; requiring customers having to repeatedly submit information to different departments within the same organisation. This leads to additional costs for both parties and delays in the realisation of revenue.
Many institutions are seeking to improve their reputations with both the industry and their customers, and are putting criteria in place to improve their internal systems and ensure that they comply with the broad spectrum of legislation; from measures to combat terrorism financing and interdict the proceeds of crime and corruption (AML), to measures designed to allow firms and their regulators to properly assess exposure to risk for OTC instruments (EMIR & DFA). Additional rules to protect clients and ensure the suitability of products that are sold have been drawn up (MiFID), as well as further legislation to aid governments in addressing tax avoidance (FATCA).
Up to the Challenge?
Firms know that one of the first points of contact with a client is often through the client onboarding process, and this can potentially distinguish them favourably from the competition if the process runs smoothly and efficiently. Customer perception of the financial firm usually starts at this contact point, and if the process is laborious and repeated requests for the same information is made from different departments, then prospective clients can be left frustrated; perceiving the firm to be disorganised with ineffective systems.
In order to ensure the onboarding process runs competently, banks need to implement a solution that addresses a number of data management challenges:
- Has the flexibility to configure with internal obligations and with the ability to interface with the firms internal systems
- Includes the capability to integrate with relevant external data providers and adapt to changing external legislation
- Enables the timely acquisition of accurate and evidenced data to support the onboarding and KYC (Know your customer) procedure
- Ability to routinely apply the firms audited risk based policies to the data with the facility to record the decisions made
- Ability to capture and process any changes to the data in a timely manner that allows the organisation to remain not only compliant with their legal and regulatory obligations, but enables them to maintain a current and accurate view of their client risk
- Delivers a true end-to-end process; which can be accessed by all departments, so the firm can onboard customers quickly, transact business and accelerate client revenue
Previously banks may have had a fragmented approach, with the client onboarding staff often being removed from the transactional information; therefore not viewing the process as a collaborative customer-centric service.
A more comprehensive, joined up approach will ensure it flows more smoothly; using a single platform that can cover the end to end requirements, from initial client contact through to the setup of relevant and accurate settlement information (SSI’s) for trades to take place. This not only enhances the user experience, but also ensures that revenue can be realised as quickly as possible without the risk of non-compliance.
Adopting the right technology
A single platform approach such as iMeta’s Assassin can apply the complete requirements from both a regulatory and operational perspective. The platform combines workflow with a business rules engine and a flexible data model, together with an integrated user interface. Changes to this platform are largely achieved through configuration and not code. Standard interfaces to industry utilities are supported for up to date information feeds and these can be added to as demand dictates.
Audit trails for compliance are readily accessible, as the technology enables users to evidence the customer data and the users decisions, based on their risk based policies. Therefore, a full trail of user and external system interaction is made available, together with documents and notes to support decisions made.
When purchasing a system, banks should start with the end in mind and look at implementing an end to end system – which manages the client through their whole lifecycle. A system which also allows banks to set different levels of permission when it comes to specific details of the client data means that there is greater compliance when it comes to data protection. This also presents an auditable trail of accountability and enables firms to manage data with far greater integrity.
A ‘Win Win’ situation!
By maintaining a total view of the customer through all stages from initial onboarding, KYC (know your customer), credit and legal – from approvals through to capturing and storing all the supporting paperwork, contracts and decisions; business critical decisions can then be made quickly to generate immediate benefits and give the firm the competitive edge.
Not only will firms start to reap the benefits of quicker routes to revenue, but by implementing this approach they will save on time and money spent on operational headcount for repetitive manual tasks, and the risks associated with manual errors.
A comprehensive automated system will also ensure that crucial steps in the client onboardiing process are not missed or relevant approvals by senior staff are not side stepped – giving peace of mind to senior management that the correct processes that they have laid out have been followed.
Victoria Adams, Head of Marketing