Compliance is becoming more demanding, more stringent and more time consuming. Regulators are demanding increasing volumes of data intelligence from banks about their clients. And in the APAC region this demand is accentuated because regulators are seeking to professionalise and hone their KYC procedures and risk assessments. Banks have to respond to that.

In particular the Hong Kong and Singapore authorities are looking to take a very proactive stance. Banks need the tools to react to that in order to create a more dynamic regulatory environment. In addition to this, the Singapore Regulator prescribed in its August 2020 paper that material trigger events should trigger exercises to ensure assessments are relevant and up to date.

To resolve this and take the step up, there is the need for better data alignment and a more granular and holistic view of the client. However, banks are currently hampered by their own IT architecture. Setups in terms of systems and tools that we see at banks are very heterogeneous.

There is one fraud system here, another separated system there and a third somewhere else. There is no overview, clunky linkages and little impact assessment of one system on another. The effect is a disjoined compliance effort that may meet specific compliance needs but does not provide any firm wide effort.

Data
In itself this is not an efficient way of doing things, but it also means that banks are not getting the most from their data and are missing a trick- the ability to leverage their own data for insight and value.

Indeed, in terms of getting the data, having it in a format where the bank can gain insight and intelligence from it is important. The bank also needs to be able to have standardisation so as to report it to the regulator and for them to use it. So, for example the adviser might know that each month the client pays someone in Panama to service and maintain his yacht but to the system that money transfer flags up a risk alert.

There needs to be a collaborative approach where all the data is taken out of silos so that a centralised system can manage and use the data and then distribute it where needed.

This marries into the user experience and being user centric. Any platform needs to actually have a good understanding of what the issues are, the best processes needed to solve them and what the use cases are. So, for example, bringing all the various risk evaluation models out of silos and bringing them together means that the bank then gets the bigger picture and solves the problem of only seeing data in isolation.

Solution
All of these issues can be solved with our platform. It brings together all compliance-related solutions and systems and provides a good, typically client-centric 360-degree, view across everything. This brings the bank the ability to have a holistic view, and thus the ability to make compliance decisions taking into account all KYC aspects. It also brings about digital efficiency in terms of collaboration between different teams.

The platform also has AI and ML elements, particularly in the risk and fraud detection side. This improves the compliance decision making process, for example by being able to calculate more granular or more comprehensive risk ratings, etc. In fact, the beauty of new tools like AI and ML and a smart integration thereof is that they not only detect previously hidden risks but also significantly support and simplify the still very manual work for compliance departments.

And in terms of integration, the architecture of the platform is singular. The core is an RPA enabled Adaptive Case Management module which functions as an orchestration layer across all processes. The impact of this is significant; for every alert and event triggered by the detection tools, it makes sure that appropriate follow up steps are flagged and executed by the relevant stakeholders. It can identify risk in the treatment processes and then put into place the steps needed to deal with it. And it supports and encourages collaboration and alignment.

As important is the modular approach. The client can start off with the orchestration layer and a single module of functionality or building block and then work out and up from there. Indeed, the thought of a large lift out and integrating a new end to end platform is overwhelming for most banks. All modules are available individually or easily integrated with each other and with third party systems. All can be configured.

This is important in a time when banks are less willing to go for big lift outs and instead want to work in a more incremental and agile fashion, solving pain points as they find them and extending out.

Going forward we expect to see strong take up of the solution. At the point where the wealth manager’s end client uses this too, we think that the current phase of many ecosystems and apps will eventually see some streamlining as people become overwhelmed with choice. We expect that solid use cases and UXs will come into sharper focus and what is useful will come to the fore over what is possible.

This article was part of TWM's recent APAC Wealth Technology Landscape Report (2021). Click here to access the full report.