The real disruption in financial services won’t be about software or data itself; it will be about data analytics and intelligence. That’s the upshot from Anil Arora, CEO of Envestnet #Yodlee. “It’s about what you are doing with your data, not what kind of data or software you have,” he said at the DataDisrupt conference […]
Bank Innovation
In my last post, we talked about the need for alternate options for some financial enterprises when it comes to cultivating AML/KYC talent. Accenture has taken an in-depth look at #talent solutions for anti-money #laundering and #know your #customer (AML/KYC) in our paper, Leveraging enhanced talent development programs to increase anti-money laundering workforce effectiveness.
We’ve also explored the broader #concerns around AML/KYC compliance in our paper, Anti-money laundering and know your customer programs: Sustainability through managed services, and the accompanying presentation.
Talent development for AML/KYC is a specific concern, and one not easily solved for many financial firms. Fatigue and turnover are high, hiring is challenging in a saturated market, and learning programs may not have kept pace with current industry and regulatory trends.
So what alternatives are available to firms for meeting KYC/AML requirements?
Here, a three-pronged approach might work. Step one is to establish a formal learning program, positioning AML/KYC as a function in which the business can invest. Next, the programs themselves may best be designed to offer role-based training, aligned to the business’s competency models and complete with certification requirements. Finally, the program could include blended learning approaches, and include ongoing reinforcement techniques.
These steps can help create a robust AML/KYC workforce over time.
For those organizations that choose migrating to a managed services model to handle AML/KYC, many benefits can be had. Why? Some businesses might find their current model is built on inefficient or manual processes. Sustaining these at the higher level needed to support new AML/KYC work might not be feasible, and upgrading the old model might not be an option either. Then there’s the flip side. For some institutions, finding the right resources to support an existing model that is updated to include AML/KYC may be a challenge.
By contrast, a managed services approach brings reduced costs, better access to the right skill set, global capabilities, scalability and improved quality throughout the AML/KYC program. For many, this option is worth considering.
There’s one more step down this journey: Adding robots or, in essence, using #technology to automate processes otherwise done by humans. Robotic process automation (RPA) offers advantages that humans can’t: It gets the job done, and also records and remembers the details of the job, bringing more data into the picture.
The idea of RPA is not new and it isn’t entirely unexpected either; our supporting presentation on the topic notes that 84 percent of banking executives surveyed by Accenture anticipate having to “train” their machines as much as they train their people in the future.[1] RPA brings even more dynamic capabilities than managed services, handling higher demand as easily as it knocks off lighter loads. Robotic processes can take place on a 24/7 basis, too.
View the presentation
Combing through the AML/KYC effort, financial firms may identify sub-processes or elements suitable to RPA, such as highly manual, high-volume efforts where the potential for error is high. These pieces might be prime candidates for RPA.
With all these #options available to financial firms, how can each enterprise go about choosing the approach that is right for them? If a combined approach makes sense, what pieces should be combined, and how?
My next blog will take a look at how firms can choose the best approach for their AML/KYC model.
[1] Accenture Technology Vision 2015 Survey
The post Tackling anti-money laundering and know your customer talent concerns? You’ve got options. appeared first on Accenture Banking Blog.
What a week—with graduation days complete, we had a chance to review progress in the Labs. Development was evident everywhere—product, but also management teams.
I wanted to follow on from my previous blog around the emergence of #RegTech (technologies that address the challenge and cost of regulatory compliance.) I wanted to explore how #investment #trends in this area are #impacting the industry and how the #ecosystem can #work with the #regulator. We’re lucky to have Jason Boud—who is pulling together a strong community in London—with us in the Labs.
Right now, compared with #Fintech, RegTech has low investment for the size of spend. Although governance, compliance and regulation (GRC) represents around 15-20 percent of run-the-bank costs and 40 percent of change-the-bank costs,[1] in 2015, US$ 588 million was invested in RegTech[2] versus US$ 22 billion in Fintech[3]. This suggests enormous potential for growth in the RegTech space from now on.
Now—what does RegTech mean? RegTech means… RegTech! We think about RegTech as #technology that lowers the “cost” (technical, physical, monetary) of regulation by using technology. It’s relevant not just in banking, but capital markets, wealth management and insurance. At its most basic, RegTech might be using better data, a workflow to reduce the complexities of reporting—or responding to new reporting requirements. Perhaps it’s making better use of existing data to lower the challenges of regulation for compliance staff—as FinTech Labs start-up, Enford, is excelling at. At the more advanced end—and with a timeline a few more years out—perhaps it’s applying machine learning or advanced AI to complex regulatory documentation, to help us ‘learn’ what the regulatory requirement is and apply a response to it.
The RegTech ecosystem requires several different backgrounds to come together: finance, entrepreneurs, regulators, lawyers and change managers. Now—given that background, employees in these areas often have a deeper knowledge base and clearer career track in industry (and salary expectations) than perhaps people who have founded traditional Fintechs. There’s a risk that fewer start-ups will enter the market; so we think the area would benefit from a degree of nurturing. Lessons can be learnt from how #banks partnered with Fintechs. This should provide a clearer roadmap for growth, help identify pain points in adoption and build confidence.
We’re certainly seeing an upsurge in activity. It’s great news for the industry, but it also raises a number of priorities. As more and more solutions are launched, it’ll be important to prevent the marketplace from becoming fragmented. Start-ups need to ensure that they’re not point solutions, but can be embedded across the business, and that they can collaborate with other RegTechs to provide more complete solutions. That might mean, for example, a trader surveillance RegTech that tracks computer activity partnering with voice recording and behavioural analytics to provide a more comprehensive solution.
For problems at the most regulated end of the business, they’re likely to be even more cautious about entering partnerships. Banks that will lead here will be the ones that are already successfully integrating their innovation agendas into the business and have built channels for partnering with Fintechs. In other institutions, regulatory and compliance functions may have to go through the same learning curve as their colleagues did with Fintech before they establish effective RegTech partnerships.
Regulators have a key role to play, too. They can help drive adoption and lower the regulatory burden by collaborating with the industry to enable greater clarity and more long-term planning. Once banks have a clearer view of what lies ahead, they’ll be more willing to invest in new technology solutions and less likely to make ad hoc, incremental changes. Certification or approval of RegTech solutions would be helpful too, allowing banks to use RegTech with more confidence.
The FCA is being extremely proactive in this area: Its ‘regulatory sandbox’, which allows start-ups to test products in a live environment, is now being copied in other jurisdictions. Looking ahead, Accenture has called on the FCA to become the ‘Github of regulatory code and business logic’. If regulation is written to be machine readable, it’ll help create a standardised set of rules and logic that ensures compliance and compatibility with technology solutions.
Banks know that they should partner with RegTech… but they don’t always know how. Guidance from the regulator will be key to fostering a richer ecosystem—one in which banks feel confident about the trajectory of regulation, and where start-ups can quickly and easily assimilate the logic of regulation to deliver the innovative solutions that are so essential.
Watch this space!
[1] http://www.bain.com/publications/articles/banking-regtechs-to-the-rescue.aspx
[2] https://www.cbinsights.com/blog/regtech-compliance-startup-funding-trends
[3] http://www.fintechinnovationlablondon.co.uk/fintech-evolving-landscape.aspx
The post RegTech: How investment trends are impacting the industry—and how the ecosystem can work with the regulator appeared first on Accenture Banking Blog.
With the introduction of #PSD2, a new era of secure payments has begun in the European Union. The new regulation is aimed at enhanced customer protection against #fraud, with stringent liability and accountability requirements and strong customer authentication features.
Read the report
PSD2 requires European #banks and other payment service providers to allow customers’ accounts to be accessed via
application programming interfaces (APIs). Their customers are able to initiate payments from their accounts directly from third-party apps and websites, and to share transaction and balance information with third parties.
The directive provides measures to protect the confidentiality and integrity of personalized #security credentials. Banks will now be authorized to block third-party access to accounts if they detect unauthorized or fraudulent activity. At the same time, providers who fail to authenticate a transaction appropriately will now be held liable for any resulting breaches.
So, what does all this mean for the incumbent players in the European financial services landscape?
Read more about this in our latest report, PSD2 & Open Banking | Security and fraud impacts on banks: Are you ready?
The post How banks can deal effectively with the security &038; fraud impacts of PSD2 appeared first on Accenture Banking Blog.
The number of #insurtech firms with a focus on big data, artificial intelligence, and the Internet of Things has skyrocketed in recent years, with those firms attracting nearly half of the total funding spent globally on insurtech. According to a report by #Accenture, there are about 70 insurance startups focusing on big data now, up from […]
Bank Innovation
#Tipping is a problem in the U.S. It’s often not clear when tipping is appropriate or expected (Uber, anyone?), and this uncertainty can lead to overtipping or undertipping. The whole enterprise is a subtle art that involves reading social signals and understanding unspoken rules, which can lead to great anxiety. In the mobile era, this lead to a […]
Bank Innovation
Automation of investment advice has gained enough momentum for even the “non-disruptors” to get involved. So what’s the best strategy for deploying this new #technology? Royal Bank of Canada makes a case for build vs buy with its new digital advisory tool. The bank piloted MyAdvisor this week with 500 of its customers in Canada. […]
Bank Innovation
If Horace Greeley were alive today, the famous newspaperman might be saying: “Go #East, young entrepreneur, go East.” China is a behemoth to be ignored at the peril of the #fintech world. In his outlook for the year, LendIt co-founder Peter Renton said earlier this month: &8220;If you are a U.S. platform and you are thinking about raising […]
Bank Innovation
Can #blockchain speed up the drag of #loan #settlements? Synaps, R3, and more than a dozen #banks say so. Synaps LLC, a joint venture from global financial services provider Ipreo and smart contracts solutions firm Symbiont, has just closed a successful proof-of-concept of its blockchain platform for syndicated loans. Nineteen banks participated in the POC, […]
Bank Innovation
The global Internet of Things needs to have great cybersecurity—that’s why leading card provider #Mastercard just acquired financial cybersecurity firm #NuData #Security. An estimated 50 billion IoT devices will be connected by 2020, according to Mastercard, which has already developed smart fridge solutions, and is currently working on smart homes, smart cars, and other wearable devices […]
Bank Innovation
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