New strategies for meeting regulatory demands

Posted on: December 10, 2019 by Mark McFadyen

The avalanche of new regulatory change continues at pace. The cycle of ‘more regulatory demands, more people, more projects, more cost’ rolls on. However, there are strategies that can help financial services companies to manage the economics of regulatory compliance.

A strategic decision to appoint a specialist long-term partner means that companies facing similar demands don’t have to tackle these problems in isolation. If partners can offer robust solutions tailored to each company’s needs, that’s ‘more change, less cost’. Some examples here will help.

Removing manual processing

Every service company onboards customers. It’s how they engage effectively with their market and deliver the right products and services. However, the regulatory demands and complexity of onboarding can mean that businesses resort to paper or electronic document scanning processes for customer onboarding that are simply too costly.

However, by changing digital solutions, companies could increase their use of automation for onboarding processes from 70% to 96%. In other words, a quarter of manual processing was removed. In this scenario, it wasn’t so much the automation solution that was clever, it was the analysis of why onboarding might fail, who the customer population was, and how to use digital technology to transform what was possible.

Common goals

Many companies face the challenge of how to modernize their capabilities to keep up with rapid advances in automation. The common goals here are to reduce costs, improve speed of processing, free up resources and maintain regulatory compliance.

The strategy of using automation to transform business processing to ‘do it once and do it right’ is both economic and customer-focused. In 2018, for instance, we partnered with RSA, one of UK’s leading providers of financial crime prevention services, to employ the latest advances in automation, machine learning and device identification in order to improve the effectiveness of processes while delivering economies of scale.

Options and strategies for outsourcing

There are a range of cultural and logistical factors that come into play when companies are deciding how to engage with automation suppliers.

Option How do we feel? Why do we do this?
Keep everything in-house and do it ourselves
  • We all like this approach.
  • You know where people are, what the processes are and who is doing them.
  • It’s like everyone is in the same team.
  • Yes, it’s costly, but is there another way to do it?
  • It’s the status quo.
  • The processes are so complex and unique that no-one could ever do this for us… could they?
Send parts of processes to suppliers, to help us manage some of the risks
  • Yes, working with suppliers is something we all do, but it can feel like we spend a lot of our time managing supplier relationships.
  • I am not convinced we get economies of scale.
  • It doesn’t feel as good as when we had it all in house. We need better oversight.
  • We can’t do everything internally, so we must rely on some suppliers.
  • It can be good for unique processes that others specialize in.
Partner with a digital transformation partner
  • Ok this sounds scary!
  • Would we be losing control of the whole business?
  • How could we make sure we deliver performance as well as change capability?
  • We can re-use learning and solutions from within and outside our industry.
  • We can manage our incremental regulatory costs through the contract.
  • We only have to deal with one partner.
  • We can drive more integrated transformational change.

Staying in control through partnering

No matter which supplier or partnership option a company chooses, the business challenges remain the same, but with partnering, the degree of unique challenge reduces exponentially. This is because, with the support of the right partner, you are still driving the metaphorical car, but without the need to wash it, fix the tires or change the oil.

The key is to retain focus on what is important to your business: the customers, strategy, products, employees and policies. This frees up the company to address its compliance challenges (FCA requirements as well as good Industry practices), its performance and its ability to change simultaneously, whilst also having more time for setting future direction. Being able to answer the questions ‘how well are we driving?’ and ‘is the performance of the car getting better?’ is essential. Through partnering, companies have a trusted collaborator, with their choice now more about ambition and where the company wants to go.

Digital Vision for Life & Pensions

This article is part of the Atos Digital Vision for Life & Pensions opinion paper. We explore the realities of digital transformation for life and pensions companies amidst wider societal change and an increasingly disrupted market.

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About Mark McFadyen
Financial Crime Assurance Director, Atos UK and Ireland
Mark is an experienced, Chartered Accountant, with over 20 years financial services experience. Mark started his career in London working in both accounting and cyber security for the big 4 firm KPMG. Mark has worked in the UK and Asia with Prudential supporting life and pensions products. In addition, Mark has also held a number of senior roles as Financial Crime Director for the UK payment body FFA UK, CISO for RBS commercial banking and Head of Fraud for RBS Retail Bank.