Transforming Client Onboarding in The Face of Complex Regulations

Financial services providers are under increasing pressure to address regulatory inadequacies in their client onboarding processes. A recent instance of failure resulted in the largest ever fine imposed by the Financial Conduct Authority (FCA) in the UK, when Deutsche Bank was ordered to pay a whopping $204 million.

In addition to the regulatory compliance demands, financial service providers are urgently attempting to streamline and digitize their client onboarding and acquisition processes. Millennials and other clients expect efficient, convenient and secure interactions with their financial service providers, across all channels and devices.

In the wake of evolving regulatory requirements and digital transformation needs, it is unsurprising to see the financial industry struggle with controlling operating costs and headcount. Most financial services firms have more than 50 percent of their resources dedicated to non-revenue-generating activities.

Business leaders are keen to embrace lean technology solutions that can enable redeployment of these resources to new product development and other activities. This is why the most agile players in the industry are in various stages of building out their regulatory technology capabilities. For instance, French bank BNP Paribas is spending €3 billion to “build the bank of tomorrow.”

Decision management is a fundamental pillar in this regulatory transformation. A capable decision management system can serve as a central repository of regulatory compliance assets and, more broadly, organizational business logic. Centralizing regulatory business logic in this way provides consistent adherence, while providing transparency for regulators as needed.

Decision management also empowers business and operations users to take ownership of their business logic. With the increased transparency, business owners can look across their portfolio of onboarding decisions and streamline where possible (unnecessary variations across channels, for example). This logic is normally buried inside application code with an expensive technology overhead during initial build out, especially for ongoing change management.

Going beyond “vanilla” decision management allows for even more risk mitigation and cost saving opportunities. This advanced level includes:

  • Governance of business logic and business terminology as true organizational assets, with their own lifecycle and audit trail
  • Sharing and re-using assets across the organization
  • Customization of assets based on regional variances (regulatory, or otherwise)
  • Upfront testing and gap identification to mitigate risk
  • Executable code generation in a flexible, automated and technology-agnostic manner to minimize technology resources

The ability to respond to regulatory changes and regulatory requests, without undertaking technology projects, is a powerful capability.

Beyond client onboarding, compliance with regulations such as Dodd-Frank, Basel III, MiFID II and the U.S. Dept. of Labor Fiduciary Rule are all of concern to business leaders. Operational risk and cost for each of these can be mitigated and controlled through implementation of a decision management system.

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Mehlam Kalverts

Mehlam Kalverts is a solutions architect with Sapiens DECISION primarily focusing on the delivery of business transformation and change management projects across the financial services, mortgage and insurance industries. Mehlam leverages all of the components of the DECISION Suite, the practice of decision management and BPM to help clients achieve their transformation goals. Mehlam has previously held roles as a decision architect and business/systems analyst at Sapiens DECISION and Fidelity Investments.

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