Blog | Jun 13, 2022

A new way of working for risk and compliance teams

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Risk and compliance teams are at the forefront of strategies undertaken by financial services institutions to transform and grow their businesses. They are responsible for ensuring that organizations balance the need for change and growth against the risks of failing to meet the demands of regulators and stakeholders.

Meanwhile, the volume and complexity of regulation across the globe continues to gather pace. Banks and other financial institutions need to respond accordingly. They also react quickly and decisively to unexpected events such as the conflict in Ukraine.

So given these challenges, how are organizations taking action to ensure they don’t risk falling foul of the regulators - and experience reputational and financial damage as a result?

One answer is to take advantage of intelligent automation (IA). IA enables risk and compliance teams to instruct software known as digital workers. Digital workers take on the most time-consuming and resource-hungry processes that they manage, such as Know Your Customer (KYC) for new clients and Anti-Money Laundering (AML) checks.

Coping with higher workloads

We recently partnered with the International Compliance Association (ICA) to uncover the views of 254 risk and compliance professionals in financial institutions towards intelligent automation. We looked to see what are its advantages, how many organizations had adopted it, and what is preventing their particular organization from investing in it.

The findings showed an overwhelming proportion of respondents agreeing that they face a bigger workload than ever before. Almost nine in 10 (86%) respondents reported facing ‘significantly higher’ or ‘slightly higher’ compliance resource requirements when compared with just two years ago. Only 3% said that they were experiencing either ‘slightly’ or ‘significantly lower’ compliance resource requirements.

However, when asked how their organization is tackling the growth in workloads, the majority had either increased the size of their risk and compliance teams. Others had given additional work to existing team members. Less than a quarter reported that they had implemented automation technology to reduce manual work and improve productivity.

As Pekka Dare, Vice President of the ICA writes in the report[1] based on our research: 

“This, coupled with many firms still relying on emails, spreadsheets and manual processes to collect compliance data, shows that there are still lower levels of automation in compliance than we may have supposed.”

Bridging the divide

The problem of low investment in intelligent automation does not appear to stem from risk and compliance professionals’ own views on how the technology would add value to their organizations.

Indeed, the survey results showed high levels of agreement amongst participants regarding the benefits that new technologies could offer. Offers such as reducing human error (81% of respondents) to cutting time needed to identify and collect data (79%) and improving staff experience/reducing staff attrition (53%).

They also highlighted the biggest barriers to the adoption of intelligent automation. This included lack of knowledge about the technology. Perhaps most tellingly of all though, was that while only 7% of respondents blamed resistance from the risk and compliance team, three times as many (21%) cited cultural resistance by the board.

Since the senior board team is ultimately responsible for approving investment in new technology, this divide must be bridged before risk and compliance teams get the help they need, to deal with overwhelming volumes of work.

The disconnect runs the risk of acting as a brake on banks’ efforts to change and adapt to new market conditions. It may also make it more difficult to attract risk and compliance professionals who want to work with more modern toolsets and technologies.

Finding the direction of travel

The way forward will be for risk and compliance teams to find examples of how banks are already automating basic processes such as KYC and AML checks using financial service automation. And then, communicate the benefits of digital workers to senior decision makers.

These include:

  • automating and speeding up manual or repetitive jobs
  • freeing up time that can be used to upskill the workforce
  • creating more engaged employees
  • building a clear audit trail for tasks and decisions
  • improving the accuracy of checks and reporting
  • accelerating response times by the risk and compliance team

Whatever the future holds for the financial services industry, there is a real need to bridge the current knowledge gap and equip risk and compliance back-office teams with the automation tools they require to be as prepared as they possibly can be for the way ahead.

Dare concludes: “It is clear that compliance assurance activity continues to become more complex and demands from regulators and other stakeholders related to compliance data are also growing. These increasing demands are resulting in challenges for firms as they face resistance to investment in technology, both from cost and cultural drivers within their organizations. Automation and centralized systems to manage data demands in compliance are the desired direction of travel for most firms.”

[1] Building a New Kind of Workforce: Addressing increased complexity in Risk and Compliance through intelligent automation SS&C Blue Prism/ICA