It would not be an exaggeration to say that the recent shutdowns caused by the pandemic were a shock, not just to the financial industry but to the whole economy. Banks are uniquely intertwined into every sector of the economy and were thus affected much more than most other industries. The economy is a delicate balance – the government, regulatory bodies, and major players deliberate for months when making just a minor adjustment to ensure that the balance is not destroyed. The shutdowns and the pandemic presented a major and sudden changes, completely modifying the variables of the economy.

Bankers are experts in looking ahead, while other industries may partake in wishful thinking. Bankers can only succeed if they can predict changes and act accordingly. That is why the smartest bankers aren’t just thinking about how to keep the banks afloat right now – that is just the bare minimum. The real lesson that bankers have learned is that the whole industry was woefully unprepared for the pandemic. It is excusable, because it was so unpredictable, but bankers never want to be unaware in a similar way ever again.

The challenges ahead

The challenge that bankers are worried about the most is increasing bank resilience. How can we ensure that banks will be better equipped for any type of economic shocks in the future? This challenge isn’t just important to bankers, but to every industry. Banks ensure that the economy runs smoothly, transactions go through, and credit is available. It isn’t just important for bankers that banks continue operating – the whole economy will come to a standstill if banks cannot function properly.

Then comes the fact that we do not yet know how long the current shutdown and the pandemic will last. Some models estimate that we will be dealing with infections for the next year or more – how do banks return to any sort of normalcy if infections keep increasing? In light of all this, bankers are now looking at risk and compliance technology that can help them be better prepared for similar situations in the future.

The monitoring and predictive analytical capabilities of risk and compliance technology can deliver this functionality. Risk predictions are delivered by combining internal risk data with external risk metrics Click To Tweet

How can technology help?

Every bank already uses computers and the internet to collaborate on risk and compliance issues. It is important to understand what type of technology is required in the future and how it differs from the technology we have right now. Currently, many banks are coping with the shutdown by using cloud storage solutions to securely store data and make it available to limited employees at home.

The problem with using general-purpose solutions is that they aren’t designed for the financial industry. Sure, employees can use Microsoft Office 360 to collaborate on documents and use the many different available cloud storage solutions to store data, but they may run afoul of regulations which limit how customer data can be shared and stored. This will create compliance and risk issues which will then have to be managed.

There are specialized technology solutions for risk and compliance. These provide all the functionality which one can get from general purpose solutions and even use some of those solutions as a part of their framework, but they also have many other tools and functionalities which make them perfect for use in the finance industry and banks. At the very basic level, they are made to conform with financial regulations and can even highlight compliance issues in banking processes.

What makes risk and compliance technology so essential for banks, now it is the ability of this technology to help banks predict risk and compliance issues. Most banks had reactive risk and compliance issues. They would do audits, create reports, then act based on the reports. The turbulent nature of risks over the past few months has exposed the vulnerabilities inherent in this approach. Bankers have realized that they cannot wait for a report that comes at the end of the month to take action – they need actionable intelligence either before or right when the problem emerges.

The monitoring and predictive analytical capabilities of risk and compliance technology can deliver this functionality. Risk predictions are delivered by combining internal risk data with external risk metrics. This helps the technology solutions automatically detect problematic trends and highlight them, giving risk managers the ability to proactively mitigate risks before they are actualized.

The monitoring helps with compliance – all the bank’s risk and compliance processes are monitored 24/7. Any deviation from acceptable standards is instantly highlighted. Instead of waiting for a report at the end of the month or the quarter, compliance managers get instantly notified of any compliance issues.

Armed with real-time data, risk and compliance managers can make course corrections as needed. They can detect any problem proactively and put plans in place to mitigate the effects of those problems. Such features will be essential for banks that want to be quicker to react to the evolving risks and regulations that we are witnessing these days. It will also make the banks more resilient to similar situations in the future.

Want to see how such technology can help your bank? Get in touch with our experts to see it in action.