Traditionally, risk management and compliance have been predominantly manual based processes within the transaction banking industry. In the past, the response to new market challenges and regulations has often been to increase manpower and manually implement new rules, processes and compliance requirements.
However, the lack of agility, auditability and control that invariably comes with manual processes is increasingly leading banks to evaluate technology solutions to manage their complex risk-based compliance and anti-fraud requirements. It is driven also by the move towards integrated commercial risk management, which includes customer on-boarding, loan origination, sanctions compliance, know-your-customer (KYC) compliance and exception management - combined with the need to implement anti-fraud measures.
Risk management and regulatory compliance are top agenda items for banks, with large financial institutions also ‘de-risking’ and exiting entire businesses and product lines to minimize exposure and costs.
According to IDC Financial Insights, worldwide spending on risk and compliance technology will reach $87 billion by 2018.
KYC, FATCA, Dodd-Frank, regional risk and onboarding rules are driving major overhauls of end-to-end onboarding. The goal is not only to meet complex regulatory requirements specific to geography, line of business and product, but also to improve the customer experience and promote faster onboarding. KYC continues to be a highly manual, time-intensive process that is a major bottleneck in time-to-transact with a customer. It can take 30 – 60 days to onboard an institutional client - and with more KYC and onboarding due diligence rules, time-to-revenue will only increase. Banks need to look for ways to unify onboarding and KYC systems across multiple complex lines of business to ensure consistency in customer due diligence as well as to streamline and reduce onboarding time by as much as 70%.
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