The financial regulatory landscape has changed dramatically since the subprime mortgage crisis of 2008. The post-crisis period faced the strengthening of anti-money-laundering procedures, stricter regulations concerning cybersecurity, and the rising role of technology and mathematics in compliance processes. During this era, the significance of compliance has grown dramatically within financial institutes and service providers.
At Kidbrooke, as we deliver financial forecasting software driving the mathematics behind sophisticated digital customer journeys, we actively work with compliance functions of financial institutions. We strive to reach swift turn-around times without compromising on rules and regulations. On this journey, we found four areas which help us and our clients optimize time-to-market and deliver reliable and responsible services.
Collaboration between the compliance and financial forecasting teams is key
Achieving efficient compliance workflow is about treating it like other essential processes in a project. Often this means establishing personal contacts with compliance professionals at the financial institution early, building a relationship, understanding the project’s scope and kick-starting the work on the issues outlined. This relationship needs to continue as the project progresses. Adhering to and managing regulatory updates is not a one-off exercise but a continuous process, especially when utilising financial forecasting technology.
In our experience, the variance of interpretations and cultural diversity between clients leads to different requirements. This primarily implies the necessity to focus on listening and facilitating the inter-functional dialogue rather than suggesting solutions.
Lastly, as in all business relationships, the turn-around time needed by a vendor to answer client questions is important. Otherwise, there is a significant risk of delays and trust issues.
One approval process for unlimited use cases
One of the most notable advantages of using financial forecasting technology like OutRank® is achieving consistency across use cases and channels. OutRank®'s flexibility allows financial institutions to use the same methodology and software for the underlying calculations across functions and services. It enables banks, insurers, and wealth managers to provide the same quality of service regardless of whether the end customer prefers contacting their financial provider in person, over the phone or online. OutRank® makes this possible because it uses a single model based on the balance sheet approach. From a compliance perspective, many of our clients concluded that only one NPAP (New Product Approval Process) is sufficient for evaluating the underlying model, adopting more simplified processes for each additional use case developed after that.
Of course, this interpretation is always subject to evaluation by each financial institution, but when this is the case, the time-to-market for new use cases improves dramatically.
Proven track record of financial innovation with compliance in mind
Financial regulations and compliance are complicated fields, constituting significant barriers to innovation in the industry. It is the experience that helps us to navigate this area.
Although Kidbrooke is a relatively new company, the team has worked in the financial industry since early 2000. Before reinventing itself as a financial forecasting technology provider, Kidbrooke offered consulting services within quantitative finance, helping financial institutions adhere to regulatory frameworks such as Solvency II, building internal models, interpreting regulations, and facing FCA: s in different jurisdictions.
The Kidbrooke team used this extensive knowledge and experience to design OutRank® with consideration to compliance concerns. Therefore, it is stateless; it does not fall under GDPR; it is transparent and editable down to model assumptions and easily auditable. We always consider compliance aspects in our product development and implementation projects with our clients and partners.
Best practices of documentation management, compliance processes and auditability
Many compliance procedures involve auditing operations, documentation, and risk management processes. Hence, as our financial forecasting solution is under regulatory scrutiny, we incorporate best practices in terms of documentation of key processes and methodology to be used by our clients in the procedures. To be proactive, we also, together with our clients, interpret the rules and regulations of international FCAs and update the underlying processes and documentation as regulatory frameworks evolve.
As a tech company offering a software product, we invest much effort in codifying our documentation and processes. This mitigates critical personal risk, helps achieve a higher quality of deliverables and contributes to transparency and auditability, which our customers value greatly.
