Traditionally, risk management and compliance have been predominantly manual 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, and the move towards integrated commercial risk management — which includes looking at customer onboarding, loan origination, sanctions compliance, know-yourcustomer compliance, enterprise limits and collateral management, exception management through to implementing anti-fraud measures
— now means that banks are increasingly evaluating technology solutions to manage their complex risk-based compliance and antifraud requirements.
Risk management and regulatory compliance are top agenda items for banks and large financial institutions are 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 that are geography, line of business and productspecific, but also 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 streamline and reduce onboarding time by as much as 70%.
Using new technologies for due diligence, screening and artificial intelligence with machine learning, context and subject aware search can significantly improve operational and compliance risk for banks and reduce the time for due diligence. Banks are increasingly moving towards smarter and faster credit appraisal which will ultimately result in a better loan book with lower NPAs.
Standardizing origination processes across commercial loans, trade finance, guarantees, supply chain finance and other areas using rule based and process based technology will improve operational efficiency and reduce credit risk.
Payments risk continues to be an area of focus for transaction banks and the reduction of false positives is imperative from an operations and risk angle. Banks are also focusing on Enterprise Limits and Collateral Management as a means to get multi-dimensional real time information on exposure by currency, country, sector, counterparty and product across a customer group and subsidiaries. Despite the financial and operational challenges of regulatory compliance, investments in modern risk management capabilities must be viewed as an opportunity — not a burden — for all banks, regardless of size.
iGTB offers a broad spectrum of Commercial Risk products covering :
• Customer Onboarding
• Enterprise Limits and Collateral
• Sanctions Screening
• Exception Management
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