EFFECTIVELY DEALING WITH REGULATORY AND RISK BURDEN IN THE FINANCIAL SERVICES INDUSTRY

It is no surprise that with ever more stringent legislation, especially in the realm of anti-money laundering and beyond, all-too-often one-size-fits-all policies and regulations are stifling growth and exponentially increasing the onus on business across sectors and industries, but ever more so in the financial services provision industry.

Regulatory burden is regularly cited as the main problem area for banks and financial services providers across both sides of the Atlantic, and beyond, with 3 of the top 5 reasons all being directly interlinked with the shifting up of gears  by regulatory bodies, namely KYC, transaction monitoring and the ensuing reporting requirements.

Equally unsurprisingly, this situation has two direct and immediate effects in the banking world: a) the gradual and relentless disappearance of community banks and smaller banking operations, with over 25% of all outfits with capitalisation of less 100 million USD disappearing over the course of the past 20 years as reported by the American Banking Association, and b) regardless of size, the increased aversion to risk by financial services provider across the board.

While the former can be partially explained away through mitigating factors such as conglomerate mergers and turbulent market conditions over the past two decades, the latter is a consequence of the continued inability to effectively adapt and comply efficiently with legislative requirements, the demands posed by which are hardly going to be alleviated and will only see thresholds lower and the net widening.

As clearly shown by the findings of the 2016 Thomson Reuters survey, the average cost for KYC and CDD compliance by financial firms is  approx. 60 million USD, shooting up to 9 times that in a number of cases.  The industry’s response to the increased demands posed is an almost disingenuously simple one: throw more resources and money at the problem and pray it sorts itself out.

In reality, the opposite has been found to be true: onboarding times are on a steady increase, estimated to take 50% longer in 2017 than they did in 2015, with customers’ responses directly contradicting the banks’ belief that correct, timely and full ongoing information was being provided (hence putting into question the veracity and therefore validity of the exercise itself).

Struggling to keep up with requirements at onboarding stage, it is even more worrying to note that financial services providers of all sizes and types are further unable to keep abreast, efficiently or otherwise, with the ongoing vetting and risk assessment due on past approved applicants.

As a consequence, the industry’s inability to keep up and to manage the additional impositions has seen the appetite for exposure being directly impacted, with all the snowball effects that this has on bottom lines, the economy and the future.

Effectively financial service operators are increasingly becoming more akin to information warehouses, and no amount of increased human resource spend will ever be sufficient to manage the volumes of data requiring processing.  The increased reliance (if not total dependence) on ever growing specialised risk and fraud teams has created an inevitable bottleneck and a false sense of security that an acceptable minimum is slipping through the cracks, when the facts and figures spell otherwise.

While financial providers are having to allocate a growing percentage of their non-interest expenses (estimated by the Federal Reserve to be around 9% in most cases, down to around 3% for outfits with asset valuations between 1-10 billion USD) to cover specialist resource costs, make up for losses incurred through miscalculated risk and fines levied for regulatory non-compliance, facts and figures squarely point that the situation is entirely untenable.

The latest developments in the FinTech and RegTech universe however offer a clear and cost-effective solution that allows for specialised efforts to be refocused, automating a huge portion of both the new customer onboarding process as well as the maintenance and ongoing assessment of client portfolios, enabling risk and fraud efforts to be redirected where it really matters – the upper percentage of customer accounts that are to be considered of medium-high risk.

In a world full of customer onboarding tools, data analysis software and customer screening services, the Aqubix KYC Portal stands out squarely by uniquely providing a fully tailored and customised platform through which true automation can be achieved. KYC Portal simplifies and delivers efficiency gains across the entire prices, from the initial acquisition of customers through to the automatic determination of the exposure posed according to the currently prevailing risk appetite internal to the organisation or department, the full KYC and AML compliance, irrespective of the operation’s jurisdictional requirements and the fully automated ongoing assessment of all clients.

Connecting independently and seamlessly to any third-party service providers of choice (be they screening services, document verification providers, external data warehouses etc) and internal data sources alike, KYC Portal opens up a previously untapped realm of data management and analysis opportunities that directly impacts operational efficiencies (with improvements of over 60%, by the most conservative of estimates) through the significantly reduced time frames required to onboard new clients, the drastic reduction of touch points during the process and the delegation of the initial data collection away from the specialised risk and fraud core.

Through a trigger and alert notification system, KYC Portal effectively sifts through new customers and automatically (based on predefined parameters reflecting the organisational procedures and practices) segment applicants based on their risk value, removing the need for intervention on the low risk or the ones beyond acceptable risk thresholds.  In this manner specialist attention is refocused exclusively where it is needed – the high value but equally higher risk accounts.

Even at extended due diligence stages, KYC Portal offers a plethora of unique tools easing, speeding up and further securing the process, not least amongst which are the in-built, plug-in free face-to-face video interview recording and storage technology, facial recognition and customer overview dashboard tools ensuring that human bias and limitations are totally done away with at all points in the process.

Following onboarding, KYC Portal automatically queries all existing customer records on a continuous basis, against any number and type of external and internal data sources, to ensure that any changes in status and background of all accounts is immediately flagged and notified to the correct personnel, as are any changes in documentary validity and requirements.

Operating on a highly notification logic, KYC Portal’s infinite customisability not only ensures that no single trigger goes unalerted, but equally that no resources are wasted on unnecessary investigations and  account queries.

Building on an infinitely scalable and modular architecture, and married to a pure risk-based logic set, KYC Portal offers a plethora of additional modules which include transaction monitoring and assessment, with automatic notifications occurring in real-time whenever preset rules and ranges are triggered on an individual basis.

KYC Portal will be presented this June, 7th and 8th at the Harnessing FinTech Innovation in Retail Banking conference in London, where Aqubix are the event’s Lead Partner and main exhibitors.  Aqubix CEO Kristoff Zammit Ciantar’s keynote speech “Automating compliance – the problem, the solution, the innovation” will open the 2-day event, where Aqubix will also be hosting 2 round tables on the operational impact of the innovation and potential offered by KYC Portal.

For further information ahead of the event, or to discover how KYC Portal can help solve your organisation’s Compliance, AML and Risk problems, contact Adrian Darmanin, Chief Commercial Officer on sales@aqubix.com.

Article written by Kristoff Zammit Ciantar, CEO, Aqubix

It is no surprise that with ever more stringent legislation, especially in the realm of anti-money laundering and beyond, all-too-often one-size-fits-all policies and regulations are stifling growth and exponentially increasing the onus on business across sectors and industries, but ever more so in the financial services provision industry.

Regulatory burden is regularly cited as the main problem area for banks and financial services providers across both sides of the Atlantic, and beyond, with 3 of the top 5 reasons all being directly interlinked with the shifting up of gears  by regulatory bodies, namely KYC, transaction monitoring and the ensuing reporting requirements.

Equally unsurprisingly, this situation has two direct and immediate effects in the banking world: a) the gradual and relentless disappearance of community banks and smaller banking operations, with over 25% of all outfits with capitalisation of less 100 million USD disappearing over the course of the past 20 years as reported by the American Banking Association, and b) regardless of size, the increased aversion to risk by financial services provider across the board.

While the former can be partially explained away through mitigating factors such as conglomerate mergers and turbulent market conditions over the past two decades, the latter is a consequence of the continued inability to effectively adapt and comply efficiently with legislative requirements, the demands posed by which are hardly going to be alleviated and will only see thresholds lower and the net widening.

As clearly shown by the findings of the 2016 Thomson Reuters survey, the average cost for KYC and CDD compliance by financial firms is  approx. 60 million USD, shooting up to 9 times that in a number of cases.  The industry’s response to the increased demands posed is an almost disingenuously simple one: throw more resources and money at the problem and pray it sorts itself out.

In reality, the opposite has been found to be true: onboarding times are on a steady increase, estimated to take 50% longer in 2017 than they did in 2015, with customers’ responses directly contradicting the banks’ belief that correct, timely and full ongoing information was being provided (hence putting into question the veracity and therefore validity of the exercise itself).

Struggling to keep up with requirements at onboarding stage, it is even more worrying to note that financial services providers of all sizes and types are further unable to keep abreast, efficiently or otherwise, with the ongoing vetting and risk assessment due on past approved applicants.

As a consequence, the industry’s inability to keep up and to manage the additional impositions has seen the appetite for exposure being directly impacted, with all the snowball effects that this has on bottom lines, the economy and the future.

Effectively financial service operators are increasingly becoming more akin to information warehouses, and no amount of increased human resource spend will ever be sufficient to manage the volumes of data requiring processing.  The increased reliance (if not total dependence) on ever growing specialised risk and fraud teams has created an inevitable bottleneck and a false sense of security that an acceptable minimum is slipping through the cracks, when the facts and figures spell otherwise.

While financial providers are having to allocate a growing percentage of their non-interest expenses (estimated by the Federal Reserve to be around 9% in most cases, down to around 3% for outfits with asset valuations between 1-10 billion USD) to cover specialist resource costs, make up for losses incurred through miscalculated risk and fines levied for regulatory non-compliance, facts and figures squarely point that the situation is entirely untenable.

The latest developments in the FinTech and RegTech universe however offer a clear and cost-effective solution that allows for specialised efforts to be refocused, automating a huge portion of both the new customer onboarding process as well as the maintenance and ongoing assessment of client portfolios, enabling risk and fraud efforts to be redirected where it really matters – the upper percentage of customer accounts that are to be considered of medium-high risk.

In a world full of customer onboarding tools, data analysis software and customer screening services, the Aqubix KYC Portal stands out squarely by uniquely providing a fully tailored and customised platform through which true automation can be achieved. KYC Portal simplifies and delivers efficiency gains across the entire prices, from the initial acquisition of customers through to the automatic determination of the exposure posed according to the currently prevailing risk appetite internal to the organisation or department, the full KYC and AML compliance, irrespective of the operation’s jurisdictional requirements and the fully automated ongoing assessment of all clients.

Connecting independently and seamlessly to any third-party service providers of choice (be they screening services, document verification providers, external data warehouses etc) and internal data sources alike, KYC Portal opens up a previously untapped realm of data management and analysis opportunities that directly impacts operational efficiencies (with improvements of over 60%, by the most conservative of estimates) through the significantly reduced time frames required to onboard new clients, the drastic reduction of touch points during the process and the delegation of the initial data collection away from the specialised risk and fraud core.

Through a trigger and alert notification system, KYC Portal effectively sifts through new customers and automatically (based on predefined parameters reflecting the organisational procedures and practices) segment applicants based on their risk value, removing the need for intervention on the low risk or the ones beyond acceptable risk thresholds.  In this manner specialist attention is refocused exclusively where it is needed – the high value but equally higher risk accounts.

Even at extended due diligence stages, KYC Portal offers a plethora of unique tools easing, speeding up and further securing the process, not least amongst which are the in-built, plug-in free face-to-face video interview recording and storage technology, facial recognition and customer overview dashboard tools ensuring that human bias and limitations are totally done away with at all points in the process.

Following onboarding, KYC Portal automatically queries all existing customer records on a continuous basis, against any number and type of external and internal data sources, to ensure that any changes in status and background of all accounts is immediately flagged and notified to the correct personnel, as are any changes in documentary validity and requirements.

Operating on a highly notification logic, KYC Portal’s infinite customisability not only ensures that no single trigger goes unalerted, but equally that no resources are wasted on unnecessary investigations and  account queries.

Building on an infinitely scalable and modular architecture, and married to a pure risk-based logic set, KYC Portal offers a plethora of additional modules which include transaction monitoring and assessment, with automatic notifications occurring in real-time whenever preset rules and ranges are triggered on an individual basis.

KYC Portal will be presented this June, 7th and 8th at the Harnessing FinTech Innovation in Retail Banking conference in London, where Aqubix are the event’s Lead Partner and main exhibitors.  Aqubix CEO Kristoff Zammit Ciantar’s keynote speech “Automating compliance – the problem, the solution, the innovation” will open the 2-day event, where Aqubix will also be hosting 2 round tables on the operational impact of the innovation and potential offered by KYC Portal.

For further information ahead of the event, or to discover how KYC Portal can help solve your organisation’s Compliance, AML and Risk problems, contact Adrian Darmanin, Chief Commercial Officer on sales@aqubix.com.

Article written by Kristoff Zammit Ciantar, CEO, Aqubix