Digital technology can drive a step change in the fight against illicit financial activity, provided financial crime is given equal priority with customer experience in the digital transformation roadmap.
2. Rethinking the balance between resilience, agility and efficiency
In a dilemma broader than the fight against financial crime, banks will find themselves grappling with the challenge of needing to move fast in a crisis while ensuring security and keeping operational costs down. Lockdowns in major offshoring hubs such as India have revealed pitfalls in some offshoring/outsourcing models and has prompted some banks to consider bringing their financial crime functions back onshore/in-house, even if it means higher costs for the bank. Others are aggressively pursuing their use of digital tools to reduce manual effort and therefore the reliance on humans to perform compliance functions, while being mindful of the need to embed security and regulatory approval across technology.
3. Reviewing and redesigning operating models
Already we are seeing banks evaluating the performance of current operating models during the COVID-19 pandemic and considering how to build greater resilience, including through the prevention of financial crime. What’s become very clear during this pandemic is that today’s global economy is a highly complicated, interconnected environment. Withstanding disruption during a major global event requires an operating model with the flexibility to respond rapidly to change – to move people around, shift strategies and draw on technology to do things differently. With this in mind, we expect many banks to increase their use of external partners and utilize a managed services approach – the importance of a strong ecosystem has never been greater.
Banks considering a move to some form of managed services to enhance their financial crime function should ensure providers have the right ingredients to enable an approach that can balance resilience, agility and efficiency.
Key questions for boards to ask managed services providers
- Do you have a global standard operating model to ensure consistency of approach across regions?
- Do you have multiple delivery centers or third-party operating partners to mitigate against disruption in a particular country?
- Do you have a strong working relationship with regulators? Can you ensure their confidence in your approach to financial crime?
- Will you manage the risk of delivery across the function?
- Can you call upon a trusted network of partners including Regtechs to ensure access to the latest digital solutions?
Confidence to recover faster
The COVID-19 pandemic has taught us many lessons but for banks one of the biggest has been around the need to maintain confidence amid uncertainty. As the global economy begins to move past the immediate threat of the pandemic, many institutions may consider reshaping their approach to financial crime compliance to help deliver this confidence, and the freedom to begin planning for recovery earlier.
As banks prepare for an expected uptick in financial crime and consider how to increase resilience in readiness for future volatility, more are rethinking their operating model. Building a strong ecosystem of partners, including managed services providers, is key to a more confident recovery.