How automation can help compliance processes

Businesses operating in financial services and insurance sectors particularly are well positioned to counter risks of fraud, anti-money laundering and counter terrorism financing (AML/CTF). Therefore, they are simultaneously facing an increased demand to improve compliance standards across the board, and this is presenting new challenges across the business.

What compliance challenges are businesses facing?

One of the significant challenges organisations have to face relates to the large number of clients a business might have. Complex processes that involve many parties and data sources cause inefficiencies in operations and are often handled manually, only add to significant costs. Sometimes not all data is publicly and easily available, meaning that several times compliance teams need to reach out directly to the customer to collect first hand data. This in turn, introduces new processes that are rugged and time consuming. When the customer onboarding process and periodic reviews are not timely, the customer experience also suffers, which leads to a negative impact on the brand or business itself. It is therefore crucial for business processes to be simple and streamlined in order for customers to be able to update their data in a timely way whilst adhering to newly established KYC processes.

Human resources also remain a big KYC challenge for organisations especially if they are limited or there is a high employee turnover. Unless there is a good document management system in place together with a streamlined onboarding process to train new employees managing these processes, the business might suffer loss of information and a slower turnaround time to complete the necessary KYC checks. In addition, a lack of resources tasked to the job can lead to poor client investigations.

In summary, the KYC process can be a long and expensive one, and does not generate revenue for the business. Many hours may need to be invested by full time employees, especially if the business strives to ensure it has thorough compliance reports in order to adhere to laws and regulations.

Meeting challenges through technology

The emergence of disruptive technologies such as Robotic Process Automation (RPA) and Cognitive Automation has created opportunities for organisations to tackle such challenges. With the introduction of these technologies, organisations can enhance efficiency in terms of both speed and cost reduction whilst fulfilling legal obligations and create positive effect on the business or brand.

RPA and Cognitive Automation technologies can help reduce the amount of time required by full-time employees to perform compliance tasks. This can provide various advantages to the organisation; while the process becomes more efficient, the role of the resource can shift from a data collection role into more of an analytical role to decide whether to on-board the client or not depending on the risk score.

Document collection, which is fundamental for due diligence processes as well as data collection from various sources, can also be automated. This information can be provided in the form of a central report, which can also include an overall scoring of which level of risk is involved with onboarding the client or business. This can eventually serve as a basis for the human judgment element.

The reduction of time spent doing laborious and repetitive tasks will not only improve quality of the work done and reduce the amount of human error but also improve employee morale.

Technology such as Optical Character Recognition (OCR) can be used to process the provided documents and hence will automatically extract relevant data, fill in forms and conduct the relevant searches in the various platforms. This is usually done using existing applications, meaning there is no need to invest in new applications. Automation programmes, by nature, run as layers on top of existing applications as they interact with the user interface.

Given that the collection of the data can be offloaded to a robot, which is residing on a server, organisations don’t need to worry about vacation leave, sick leave or office hours. With automation in place, during peak seasons the system can also be scaled up in order to meet the higher volumes and scaled down again when the demand is less.

In addition, automation can run 24/7, allowing employees to spend their working hours on retrieving and reviewing the data collected by the robot and take any required decisions or escalate as needed. Whilst this will allow the organisation to meet and on-board higher volumes of clients, businesses will be less impacted by employee turnover as new recruits will only require training on how to interpret system results rather on how to carry out the process from A to Z.

Such technology embraces other dimensions. With automation in place, the client risk scoring is no longer biased by human judgment but rather provided by a predefined set of rules as dictated by the organisations business policies and procedures. The role of human judgment can instead be allocated to decide whether to on-board the customer or not after analysing the results and reports generated by the automated process. With such systems in place, employees can dedicate the rest of their time to other work that will provide better value to the organisation.

Automation also makes it easier to perform ongoing monitoring of existing clients and keep up compliance while avoiding hefty fines due to any non-compliance.

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In conclusion, RPA and Cognitive Automation have become crucial success factors. Businesses can optimise both back-end and front-end business operations, reduce the number of manual tasks, and focus on what matters most: precise and on-time risk evaluation of customers.

About the author

Brian Fiorentino is a Technical Architect with Deloitte Consulting in Malta.