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Risk reduction and compliance are key aspects in almost any company within the financial sector

Adding employees and additional manual tasks is not the long-term solution you are looking for.

Lisbeth Krogslund Client Engagement Director
Charlotte Pockendahl Andersen Client Engagement Director

Based on Valcon’s work and daily dialogue with clients, we firmly believe that we have a world ahead of us where we can make digital compliance a true lever in the operational work of financial companies within banking, insurance, pension and other financial services. At Valcon, we work with clients to make strategy actionable by combining the processes with technology, data and required changes within organisations. We have learned that combining these aspects is the key to addressing many areas – in particular, the compliance and risk reduction area.

Today, financial companies are required to work intensively with the compliance agenda. Not only are legislative requirements strict, but the vast number of daily transactions also exposes all financial companies to errors or fraud. This means that a lot of companies have introduced process steps aimed at validating, checking and approving large numbers of transactions every day. Not only are these steps time-consuming and thus costly, but they are also very inflexible and not susceptible to the fact that risk regularly occurs in many new places within organisations.

Fun fact: One out of ten employees at banks and credit institutions are employed in a compliance task.

A new and more adaptive approach to compliance is needed. An approach that will address the major needs, that is a clear-cut solution to many manual tasks and that is adaptable as the world and the organisation grows and evolves.

At Valcon, we have helped clients within the financial sector in a variety of tasks and projects addressing compliance issues. What we have learned is that in many instances, the compliance and risk issues are still addressed using manual procedures.

To ensure that compliance issues are managed properly, you need to propose a digital consideration altogether. After all, the information that compliance and risk management is based on starts and ends with data. By using data and technology to carry out relevant tasks, you will not only experience automation of tedious manual tasks, but also a higher hit-ratio of relevant issues to be analysed by real people, a higher volume of regular checks needed to remain compliant and – with the use of AI or ML technologies – an increased likelihood of catching the instances that you need to do business in a conscious manner.

Implementing digital solutions implies introducing new tooling or new software as it requires more data processing. Therefore, we suggest that solutions are designed and built as simple as possible rather than inventing large-scale frameworks.

The sooner companies acknowledge that compliance and risk management is an operational issue, the sooner the transparency in the operational processes and the opportunities for improvement are there to be addressed.

A highly digital approach to your compliance issues will:

  • Emphasise digitalisation: Support and promote no-touch processes where it is possible to free up staff to handle only the exceptions that require manual intervention. Through the design of the end-to-end processes to include compliance and risk handling from the outset, you can ensure a digital approach and at the same time ensure a design that caters to client needs and smooth customer journeys, not to the needs of the company
  • Emphasise span of control: Help you address the ever-increasing demand for compliance tasks required to keep up. Compliance and risk-related tasks tend to mushroom, and if you are not in control, you are left with an increasing manual burden if your design is not correct
  • Emphasise scalability: Ensure that your operating model is scalable. If transactions grow by several hundred per cent, a non-digital approach will call for a corresponding increase in manual resources or dependency on named resources with specific knowledge representing a potential source of non-compliance or a higher operational risk than what you are willing to assume unless you can resolve it with more people

As stated earlier in this article, compliance in the financial industry both begins and ends with data. By choosing to own the process and ensuring that it revolves around data, you will always be in full control of your exposure and your remediation abilities, and you will have the agility to react fast if required.

At Valcon, we have experience with addressing these issues. Our experience stems from projects with clients across North-western Europe where we have helped clients design and implement a variety of solutions, all of which address the need to gain the full operational control of how they work with compliance and risk management-related operations today, tomorrow and in the future.

If you are curious about how we might be able to help you address this, please do not hesitate to reach out to us:

Lisbeth Krogslund
Client Engagement Director
[email protected]

Charlotte Pockendahl Andersen
Client Engagement Director
[email protected]