Study shows manual processes slow down banking compliance
A recent study commissioned by RiskScreen, a provider of onboarding, screening and in-life monitoring technology, found two-thirds of compliance professionals at banks rely on manual processes for performing know-your-customer checks.
Despite 70% of respondents agreeing that the pandemic has accelerated digital transformation in the banking sector, the study also indicated that more than half of respondents said that the number of false positives delivered by their existing solutions are too high.
The survey, which was highly targeted to the banking sector, also revealed that 65% of compliance workers are still relying on Google for manual adverse media searches. RiskScreen explained adverse media screening is a part of the anti-money laundering and know-your-customer due diligence processes that regulated entities, such as banks and insurance providers, must perform when onboarding new customers.
According to Stephen Platt, RiskScreen chief executive officer and co-founder of the International Compliance Association, relying on manual processes is hampering financial institutions’ ability to generate revenue while simultaneously exposing them to unnecessary risk.
“Manual processes not only waste valuable employees’ time and add to the friction of a negative customer experience, they also significantly impact a bank’s time to generate revenue from new and existing business,” Platt said in a news release.
“From a financial crime perspective, they can leave banks unnecessarily exposed to human error, risk from regulatory fines and huge reputational damage,” he continued.
Interestingly, the survey found that — despite a majority of respondents admitting to relying on manual processes in part to conduct their due diligence checks — the risk of fines and serious legal consequences was their top concern in relation to compliance failures.
Although the adoption of regtech solutions in the banking sector accelerated throughout the course of the pandemic, Platt argued that banks are still struggling with onboarding and screening customers efficiently while remaining compliant.
“While the pandemic certainly accelerated digital transformation, financial institutions still seem to be struggling with overly long onboarding times as well as dealing with monitoring risk with existing customers,” Platt said.
“If the banking sector wants to truly accelerate their processes and achieve faster revenue, then they must start investing in the technology and tools that will make it easier and quicker for compliance professionals to do their job effectively,” he went on to say.
The full report can be downloaded via this website.