Keeping up whilst keeping on - implementing digital onboarding to navigate an uncertain future

As regulatory uncertainty continues to rise, the importance of regulatory technology (‘RegTech’) in helping financial services providers tackle a landscape that increasingly resembles a game of whack-a-mole is of greater significance.

By its very nature, RegTech is a sophisticated technology designed to solve challenges around regulatory compliance, risk management, and data reporting. It’s fast gaining prominence in the local and international financial services industry as firms grapple with seemingly endless and ever-changing regulations and additional data challenges. During a recent speech on GDPR and accountability, UK Information Commissioner Elizabeth Denham said, “If a business can’t show that good data protection is a cornerstone of their practices, they’re leaving themselves open to a fine or other enforcement action that could irreversibly damage bank balance or business reputation.” This is further strengthened by reports that global regulators have levied over $321 billion in penalties for regulatory violations since 2008. Mistakes, however unintentional, are costly. By implementing a digital onboarding solution to effectively eliminate, or at least drastically reduce, the amount of manual work compliance teams have to complete when onboarding a client, RegTech can help them be more accurate and comprehensive whilst saving time and money.

Compliant client onboarding workflow

What RegTech ultimately represents is the development of a technology framework and standards to manage the cost and complexity of compliance with specific regulation(s). In other words, technology that organises workflow and data in a smarter way to facilitate change, solve complex regulatory challenges, and mitigate development costs. RegTech is a lot more than just digital workflows, it’s about ensuring businesses are monitoring and responding to an ever-changing compliance landscape and staying ahead of the curve for competitor advantage. Some of the most sophisticated workflows, such as is seen with Vaiie Onboard workflows, have been created so that they are already aligned to both international and local regulation so that financial services firms don’t have the onus and cost of doing that for themselves and can achieve significant cross-boarder efficiency in the process. Automated technology will help to not only collect data more efficiently, but also to continuously monitor it, which is considered one of the most onerous parts of a compliance function in current times.

Responding to the regulations of tomorrow

Automating the RegTech onboarding workflow means more than just smoothing out processes and enhancing efficiency. It means having an adaptable system that’s continuously learning and updating itself in line with a constantly evolving regulatory landscape. It means complying with today’s regulations, as well as the regulations of tomorrow. It can be increasingly challenging for compliance teams to manage existing compliance requirements, whilst implementing new obligations.

Changing the face of Compliance

Compliance functions need to continually evolve to be more industry-driven, while also becoming more proactive and able to produce results in real-time. Successful firms will be nimble, flexible, and able to quickly implement cutting-edge technology that leverages data analytics, AI and distributed ledger technology to continue to have an advantage in an increasingly competitive field.

Compliance teams have an array of tools available to them today that their predecessors could only have imagined. However, managing the regulatory compliance function for a financial services firm is arguably more difficult today than ever before, despite the increase in available technology solutions. Mostly, that’s due to the underlying rules that are increasingly complex, nuanced and everchanging. Risks, too, are evolving. The more technology develops, so too do the risks and firm’s exposure to them and the resulting negative consequences.

Navigating an uncertain future

In the same way nobody expected a Covid19 pandemic to affect the world over, shifting client behaviours, disruptive technologies, and compliance-driven regulations are changing the financial services industry like never before.

The UK has long been recognised globally as a thought leader in financial regulation, and the same can be said for Jersey, so it is no surprise that both the FCA and JFSC have been proactive in their approach to technological innovation in the financial services industry. Soon more financial services companies will be leveraging multi-jurisdictional workflows with pre-determined KYC profiles to reflect up to date FATF recommendations and jurisdictional requirements, ensuring client onboarding is fast, efficient, and above all, globally compliant; an important aspect of the Channel Island trust industry.

A tremendous amount of chargeable time is lost during the initial onboarding, review and approval stages of a client engagement. Businesses can now leverage intelligent review and approval workflow processes which ensure administration teams can review uploaded client documentation and approve or reject within one solution for a robust and fully accessible audit trail.

We’re on the cusp of a radical transformation in financial services. The map of the financial landscape is being redrawn, and it’s essential that businesses look to rebuild their onboarding processes from the ground up to take advantage of new capabilities, or lose ground to more digitally savvy competitors.

Article first appeared in Connect Magazine Issue 105 on page 64.