Banks know the importance of digital transformations – it is critical that banks stay as competitive as possible, and using the latest technology is essential to stay competitive. Technology enables banks to detect compliance issues faster, monitor risks in real-time, and gain insights into important trends. The banks that are not going for a digital transformation for their risk or compliance framework are limited not by desire but by other operational, managerial, or budgetary obstacles.

However, thanks to recent changes in the way risk and compliance technology is designed, many of these obstacles can be easily overcome by banks that want to quickly improve the productivity of their risk and compliance departments. The 3 biggest obstacles to digital banks for mid-sized banks are:

  • Budget Approvals
  • Implementation Apprehension
  • Demonstrating Value
Technology enables banks to detect compliance issues faster, monitor risks in real-time, and gain insights into important trends. Click To Tweet

Budget Approvals

A major obstacle for compliance and risk teams that want better tools is getting the approval to implement risk or compliance technology. Banks want leaner operations where they can get more productivity while lowering the associated costs. Paying to have more tech implemented in risk and compliance departments appears to be contrary to this goal – wouldn’t that increase the costs of the departments, thus making them less efficient? This leads to many implementation conversations dying not because the bank wasn’t interested in the technology, but because the risk and compliance team couldn’t get the budget approved.

Solution

This obstacle can be tackled in multiple ways. The easiest way is to go for a smaller implementation at first, which allows the risk and compliance teams to show that the solution being implemented will generate ROI without requiring a major budget allocation. This is only possible with modular risk and compliance management platforms.

Modular solutions can be implemented in part. The bank can choose to implement a single risk or compliance tool. The cost of procuring a single tool is very low – which means that getting an approval from the board will be trivial. Once the tool starts generating value for the bank, the risk and compliance teams can slowly expand the implementation. The advantage of a modular solution is that while it can be implemented in parts, all the parts come together and act as an integrated platform.

Implementation Apprehension

There are multiple reasons that management is apprehensive about implementations. Most of the stigma related to implementations is due to the digital transformation businesses went through in the late eighties and the early nineties. It was the first time that many businesses implemented technology at such a large scale. There were many reports of absolutely disastrous implementations that went over the budget, went on for months beyond the deadline, and failed to deliver ROI. This is why those who have been in the industry for 3-4 decades are apprehensive about implementing new technology. However, it must be kept in mind that technology has advanced beyond recognition in the last three decades. Implementations are no longer such a long and risky process

Solution

Cloud solutions are the perfect way to overcome any apprehension the board may have about the implementation. Since cloud solutions operate on the cloud, the work required to implement a cloud solution is significantly faster and easier than implementing an on-site solution. Some cloud risk and compliance solutions can even be set up in less than a week.

Demonstrating Value

Demonstrating the value of a tool or solution is a problem which can be problematic for most teams – including risk and compliance. One problem is that the teams are the ones best equipped to realize how useful the solution will be for the organization. Risk and compliance teams can quickly deduce the value that risk or compliance technology can bring to the organization but the board, which has the power to approve or deny the implementation of the technology, may not have the expertise to understand the value of the technology.

There is another problem with demonstrating value – whenever something is being assessed, it is compared with alternatives. This means that risk and compliance teams will have to show how better things would be if they had the risk or compliance technology, but there is a major problem with this approach – they would have to show the problems in their current approach. No team wants to tell the board why they are not working as efficiently as they should be right now.

Solution

Instead of focusing only on the risk and compliance team performance, there should be a focus on what the technology will be able to deliver to the board. Modern risk and compliance solutions come with built-in customizable executive dashboards which highlight important metrics and updates. This keeps the board in the loop regarding risk and compliance in a way that was simply not possible before. By highlighting such functionality, which allows the board to easily monitor risk and compliance progress, teams can easily demonstrate how the solution will provide value not just to the risk and compliance teams but the whole organization.

Stuck in a similar situation in your bank? Get in touch with our risk and compliance experts to see how you can easily show how useful risk and compliance technology will be for your organization.