Covid 19 has highlighted a need for firms in the business world to be adaptable to rapidly changing conditions. In Financial Services, changing regulations and requirements from regulators mean that day to day users need to have solid processes and case management tools which allow them to maintain a strong structure of checks and balances.  At the same time, they need to be able to modify their guiding rules quickly to adapt to these changes. The pace of change in an interconnected world is only going to accelerate and relying on quarterly or even monthly system releases to implement change will result in companies looking like dinosaurs compared to new entrants. 

Soooo Many Regulations

Onboarding and the broader area of Client Lifecycle Management (CLM) have become big focus points for financial institutions because of regulations. What started off as a simple process (very simple before the US Patriot Act in 2001), has become increasingly complex as regulators around the world have put more and more regulatory requirements in place around knowing and classifying customers.  It started off with simple customer identification processes and has expanded into a number of different themes.  We are all way too familiar with DFA, FATCA, CRS, MiFID II ,the 5th EU AMLD, CCPA, and GDPR (and the list goes on).

 As regulators deepen their scrutiny around the world, the loopholes and gaps they uncover only lead to more and tighter regulations, resulting in more requirements for the financial institutions and changes to the processes and systems they use to manage the regulatory framework.

Which Regulation Covers What??

Keeping track of which regulations apply for Which clients, trading Which products, in Which jurisdiction has gone from being a simple checklist to a series of IF THEN ELSE statements to sophisticated rules engines that can dynamically manage multiple layers of rules for all permutations and produce a consolidated and unique set of requirements for a customer. Having a rules framework engine has become essential in order to remove human error from the equation and avoid Regulator anger and fines.  Rule engines need to be able to handle these multiple layers of regulations and conditional rules in a dynamic fashion as quickly as banks offer new products to clients.   

Where has the time gone?

Let’s look at the impact of COVID-19 and looking at some of the more recent rules that have come out as conditions of government funding during this crisis. If we look at the US CARES Payroll Protection Program for instance, banks are having to provide funds to clients and update their rules in a matter of days to handle. It’s fair to say that as other countries roll out similar rescue packages, the banks are having to react quicker. Implementation times have changed, gone are the days of having quarters or years to prepare for regulatory rules changes.

Modern Client Lifecycle Management (CLM) systems are now allowing business analysts to use the rule engine interfaces to add new products and rules, or modify existing regulatory requirements and process flows in minutes. This has allowed some of the largest banks to be able to handle these new regulatory changes quickly and safely as the changes are propagated out to all users of the system whether iit’s in  KYC analysts, Credit users, Legal or Compliance. Having a core case management system that can be consistent across an entire firm reduces the need for re-training of new systems every year and allows firms to make these changes at the speed of business.  As the industry moves towards a low code configuration environment and away from traditional slow change implementation technology processes, the winners will surely be those who are operating in a low code environment, where changes can be made in days rather than weeks or even months.

All this demonstrates the importance for banks to use all the levers at their disposal. Being able to prioritize and continuously flex workflows against across certain customers types, products, and locations will help the most. In a world of increasing confusion and uncertainty, banks benefit from having the capability to minimize rule and process changes on their staff and this helps to keep customers calm and assured that disruption to their finances will be kept to a minimum. Change is the one constant for the future.