With every year, as fraud becomes more sophisticated, financial crime compliance software faces increasing pressure to keep up, and compliance teams are forced to work faster, yet more accurately, to meet increasing demands, but the technology is now playing a much greater role in helping banks to strengthen their controls.
The challenge for banks isn’t just about meeting regulatory requirements; they also need to ensure that they’re onboarding their customers efficiently, detecting any suspicious activity, reducing manual workloads, managing ongoing monitoring, all this while still maintaining a strong customer experience. It’s at this point that RegTech solutions for banks can help provide significant value.
RegTech refers to the digital tools that help regulated businesses manage their compliance processes more efficiently. Examples of RegTech in banking and what it can do include:
RegTech in banking is so important as banks operate in one of the most heavily regulated sectors. The list of security tasks they must perform is already long, and it’s not getting any shorter. Tasks include identifying customers, assessing risk, screening against PEP and sanctions lists, monitoring activity, and then demonstrating that all of the correct checks have been completed.
What can often make this difficult is the manual process during these actions; it can be time-consuming, inconsistent, and can involve a number of team members who could be handling a variety of other tasks that need completing. With the volume of customers on the increase and financial crime tactics constantly getting more and more sophisticated, manual checks risk leaving gaps in visibility.
How banks use RegTech can help to create more efficient, consistent, and scalable banking compliance. Technology examples are many, but the main benefit needed is the automation of key checks, whilst bringing information into more connected workflows. This allows banks to reduce administrative pressure while improving their ability to identify risk.
AML screening is one of the key areas where RegTech supports banks by helping to identify customers, assess risks, and screen against watchlists.
A strong AML RegTech solution is important as a customer’s risk cannot always be assessed by identity alone, and banks need to know if political exposure, sanction links or any adverse media concerns have come into play, so that they can pay closer attention to these and other indicators.
SmartSearch supports this through AML checks for banks and building societies. The platform helps financial institutions automate screening, perform ongoing monitoring of alerts, and strengthen risk management, all within one place.
Another part of RegTech is digital identity verification, as a bank must be sure it’s dealing with a genuine person or business. Today, customers increasingly expect fast and seamless digital onboarding, but these checks are vital to get right, so a platform that can help you perform both is crucial.
Digital identity checks reduce reliance on manual document reviews and in-person processes, which can help to speed up onboarding, yet still perform checks to reduce risk and improve consistency.
For banks, this is a critical balance, as a verification process that is too slow can cause friction and even customer drop-off. However, a process that is too weak can expose it to fraud and regulatory risk.
Compliance isn’t over as soon as a customer is onboarded, and banks need to monitor activity over time to be able to spot any evolving suspicious behaviour, unusual patterns and potential signs of financial crime, and this is why compliance technology is so important.
Tools for transaction monitoring help financial institutions review and keep track of any high-risk behaviour in case further investigation is required.
Fraud detection technology is an area that can support banks by identifying risk signals that can be difficult to spot during manual checks.
SmartSearch’s monitoring and reporting solutions are all designed to help firms maintain compliance through all of their processes, including alerts, reporting and ongoing monitoring, thereby supporting them in a more proactive approach to AML risk management.
Banks must not only be able to perform these security tasks but also show that these compliance checks have been completed properly. This means that RegTech solutions need to be able to not only support screening and monitoring but also help in maintaining thorough records.
The evidence used to prove that these checks have been completed properly can include audit trails, string reporting functionality, and case management features. These are all important for banks as evidence of the decisions made throughout the customer lifecycle. It doesn’t matter if a customer is approved, rejected or escalated for enhanced due diligence; compliance teams will need a clear record as to why and how that decision was made.
A strong RegTech solution should therefore support transparency, consistency and audit readiness to assist banks across all of these areas.
The most effective RegTech solutions are not isolated tools; instead, they integrate with wider compliance workflows already in place.
An example of this is with the various ID verification, watchlist, adverse media screening, KYB, enhanced due diligence, and ongoing monitoring checks, as they are all linked. If these checks are siloed and performed across disconnected systems, then compliance teams may end up facing duplicated work, inconsistent results, and a reduction in overall visibility.
A connected RegTech platform, however, helps banks to reduce any fragmentation, improve efficiency, and create a much clearer view of any customer risk.
When assessing the RegTech solutions available, banks need to consider whether the technology can:
The right solution should be able to assist banks with improving their compliance processes without adding any unnecessary complexity.
RegTech solutions used by banks are becoming a priority as they need to continue to manage compliance in a financial landscape that is seeing an increase in crime.
Whether it’s for AML screening, identifying customers, monitoring transactions, fraud detection or regulatory reporting, the technology is there to help banks strengthen their core controls and equip them to make faster, more informed decisions.
For financial institutions, the priority needs to be opting for RegTech solutions that can support connected, risk-based compliance workflows. SmartSearch helps banks and financial services firms to verify customers, automate AML checks, monitor alerts and manage compliance, and all through one platform, thereby supporting stronger risk management, as well as a smoother onboarding experience, overall. If you’re looking to modernise your compliance processes and reduce risk across your banking operations, request a free demo today or contact our team to find out how SmartSearch can support your RegTech requirements.