The financial sector is undergoing a paradigm shift, necessitating a change in risk and compliance management. Banks and financial institutions are no longer competing solely against one another; they are now competing against Fintech-powered apps and services that provide instantaneous services. Many of these new Fintech startups are not subject to the same regulatory agencies and laws as the financial sector, which provides them with a significant operational efficiency and speed advantage.

Banks and financial service businesses will need to accelerate and improve the accuracy of their risk and compliance processes if they wish to compete with Fintech apps and services. Three fundamental areas offer numerous opportunities to improve efficiency:

  • Communication
  • Reporting
  • Metrics
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How Communication Impedes Efficiency

There is a need to rethink the way employees communicate when working together on risk and compliance tasks. It is always important to remember the competition when formulating any plan to compete. A successful strategy is one that can utilize an entity’s strengths while reinforcing its weak points. The advantage that banks and financial services have over Fintech apps and services is their experience and insight into the financial sector. Most Fintech businesses are barely half a decade old while the financial sector has been providing financial services for more than a century.

The weakness is the requirement for manual risk and compliance work. Fintech services and apps are completely automated, which allows them to deliver services instantaneously. The financial sector, however, must ensure that its risk and compliance teams have proper oversight over the transactions and other actions being taken by the business. Focusing on communication and providing collaborative tools to risk and compliance teams can minimize the time they need to ensure compliance and mitigate risks.

A platform for collaboration that automates workflows and notifies people about the work that needs to be done can result in dramatic decreases in completion time for processes. Instead of using emails and phone calls – both inefficient means of communication for time-sensitive work – employees can simply log onto the platform to see what they need to do. This also provides management with visibility into risk and compliance processes throughout the different business units, enabling them to implement process improvements wherever needed.

Reimagining Risk and Compliance Reports

Risk and compliance can be a reliable source of insights and business intelligence. Large enterprises aggressively collect and analyze as much risk and compliance data as possible to generate insights and predictions. Smaller businesses often do not have codified risk and compliance data collection processes or tools, which means their reporting still needs to be done manually. While manual reporting methods were acceptable when banks only competing with other banks, the advent of Fintech apps and services have made manual reporting obsolete. There are several problems with manual reporting – the amount of labor hours required, the possibility of human errors, analytics based on older data, and more. The solution is to rethink the way risk and compliance reporting is handled.

There are two fronts on which reporting needs to evolve. The first front is to rethink the way reports are compiled and presented. Instead of asking employees to dedicate a lot of time to reporting, businesses can use risk and compliance management platforms that automate reporting. These platforms can fill in the data and information into prebuilt templates and quickly generate reports. This saves a lot of time and makes it easier for management to get reports about any issues they are dealing with.

Banks and financial services will need to improve the accuracy of their risk and compliance processes if they wish to compete with Fintech apps and services. Click To Tweet

The other front is even more impactful: real-time reporting. Management does not have to limit itself to reports presented to it periodically. Modern risk and compliance management platforms provide real-time reporting through dashboards and notifications. This means that instead of depending on compiled reports based on outdated data, management can see the latest information on executive dashboards within the platform. This is critical because it allows businesses to increase the speed of risk and compliance processes while ensuring that nothing important is being ignored.

Measuring Performance with Metrics

One of the biggest differences in born-digital Fintech apps and services when compared to banking and the financial sector is performance metrics. Fintech services and apps keep track of as many data points as possible. They track how many new accounts are being opened, the number of transactions, the number of complaints, the time it takes their customer service agents to answer a query, the time it takes to resolve a customer complaint, and much more. These metrics are used by management to fine-tune performance and deliver improvements.

Enterprise Risk Management Software

Banks will need to collect and monitor risk and compliance performance metrics if they want to be able to compete with born-digital competitors. They will need to look at the processes that take them the longest time to complete and rework those processes. Metrics also highlight the vulnerabilities in the existing risk and compliance framework.

These are the three areas where banks and financial organizations can deliver significant performances that will result in their operations becoming more efficient. For more details on the most critical parts of a successful risk and compliance framework download our complimentary whitepaper: Reducing Effort & Increasing Visibility in Compliance: 3 Must-Have Technology Capabilities.