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How do you go from compliance to experience in cross-border banking?

Authors

5 minute read 05 Aug 2024
Related topics
Wealth and asset management
Managed services
Financial services
Law
Banking and capital markets

A robust cross-border framework is essential for financial institutions seeking to boost efficiency and reduce risk.

In brief

  • Companies in the financial industry with international operations must ensure compliance with legislation in every relevant jurisdiction
  • Many financial institutions still rely on time-consuming and error-prone manual processes
  • Well-managed cross-border activities protect the bank’s reputation but also enhance client and employee experience

Increased scrutiny of supervised financial institutions by regulatory bodies around the world is coinciding with megatrends like digitalization, mobility and transparency. Banks, securities firms and other financial institutions need to manage the legal and reputational risks associated with providing cross-border financial services. Client advisors, legal teams and back office employees are under pressure as workloads grow – but resources don’t. At the same time, clients expect easy, accurate and timely reporting and exceptional service – wherever they happen to be in the world.

Financial institutions with a significant volume of cross-border business can struggle in particular to keep tabs on the specific requirements in every client location, especially as regulations are added or updated regularly. Banks need to ensure clear, traceable and accurate answers as to whether, for instance, a relationship manager is allowed to offer a particular product to an existing client in a given market. Many organizations are still relying on individual guidelines to answer such questions – a manual process that is as time-consuming as it is error-prone.

Ideally, banks should have in place a robust cross-border framework that defines market-specific requirements. In practice, there are many challenges to establishing and maintaining such a system.

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Ideally, then, banks should have in place a robust cross-border framework that defines market-specific requirements for products and services in each jurisdiction. In practice, there are many challenges to establishing and maintaining such a system, not least when internal resources and budgets are already stretched.

 

Compliance breaches can be costly – not just in terms of potential fines, but also the risk of reputational damage in an environment where stakeholder trust is a key asset. For each jurisdiction, financial institutions need to know:

To answer these questions for all clients in all locations, banks should prioritize these five points:

  • Ensure adherence to cross-border compliance standards as defined by client policies and target market regulations
  • Empower internal stakeholders to deliver compliant services with confidence – through suitable tools and training
  • Inspire confidence among clients through service that is excellent every time and timely, accurate reporting
  • Be prepared and adaptable to changes in business activities, business models and regulations
  • Maintain complete and up-to-date information, tailored to reflect the bank’s perspective on business activities and risk appetite

For banks with far-reaching cross-border activity, a huge volume of data – and knowledge – is needed to answer these questions quickly and accurately. What’s more, data needs to be reliable and accessible for all relevant stakeholders. Tools and technology promise new ways to manage these aspects. Solutions can overpromise and underdeliver, however, increasing the burden on teams that are already stretched. An alternative – and cost-effective – approach is to partner with an external organization that effectively combines tools and human expertise. EY’s Cross-Border Online (XBO) solution, for example, is a single integrated web-based tool that can be accessed globally and supports all stages of cross-border content generation. The user-friendly technology is backed up by the resources, experience and expertise of EY’s global organization. All of the bank’s stakeholders benefit from the speed, clarity and responsiveness the service offers. As every business setup is unique, financial institutions can tailor content to their needs and choose where enhanced management information makes sense. It means the bank has full control over rules and scope, and full transparency on cross-border activities. And employees and clients alike benefit from an enhanced experience.

Summary

While the financial sector’s regulatory environment is set to become more complex, dealing with it doesn’t have to. An effective cross-border framework covers all aspects in a centralized and integrated approach. External support can be a cost-efficient shortcut to smoother work flows, faster processes – and more satisfied international clients.

About this article

Authors

Related topics
Wealth and asset management
Managed services
Financial services
Law
Banking and capital markets

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