Client-Centric Compliance: A Strategic Imperative For Modern Banking

Republished By Plato

Followers: 0

In the dynamic landscape of banking, the synergy between compliance functions and strategic decision-makers plays a pivotal role in shaping the client experience. This article delves into the transformative potential of aligning compliance and strategy to enhance customer satisfaction, navigate evolving markets, and fortify institutions against unforeseen challenges.

The Missed Opportunity:

Often portrayed as adversaries, compliance and strategy teams stand to gain immensely from collaboration. As technology promises innovation, new risks emerge on uncertain economic and geopolitical fronts. The success stories of banks underscore the missed opportunity for strategic advantage when compliance and strategy operate independently.

Unlocking Competitive Advantage:

Collaboration between compliance and business leaders can significantly impact two key strategic objectives: differentiating client experience and investing in fast-evolving areas.

Differentiated Client Experience:

In today's digital era, where customer experience is the cornerstone of competitive advantage, the collaboration between compliance and business leaders becomes instrumental in crafting a client-centric approach. This partnership aims to streamline processes, eliminate friction points, and ultimately enhance the overall customer journey.

Consider retail banking and payments, where identity verification processes often pose challenges for consumers. These processes can be time-consuming and confusing, leading to negative experiences. By fostering collaboration, strategy teams with expertise in customer needs can work hand-in-hand with compliance teams to identify critical needs and seamlessly embed compliance requirements into customer journeys. This not only enhances user experience but also ensures adherence to regulations.

In institutional banking, the intense and sometimes redundant queries for information related to complex know-your-customer (KYC) requirements can frustrate clients. Closer collaboration between compliance and strategy teams allows banks to simplify this process in a client-centric and risk-informed manner. The result: a significant improvement in customer satisfaction scores and a reduction in administrative touchpoints.

Initiating a review of priority client-facing processes serves as the starting point for collaboration. Cross-functional teams, comprising experts in compliance, technology, operations, strategy, and other functions, can work together to identify opportunities for improving user experience through simplification or rationalization of controls. This inclusive approach ensures that compliance requirements are seamlessly integrated into customer journeys from the outset.

Investment in Fast-evolving Areas:

As financial institutions explore growth opportunities in rapidly evolving domains, compliance becomes a crucial partner in shaping strategies. As such, it becomes important to understand how collaboration can help institutions navigate compliance uncertainties related to data and analytics and capitalize on emerging trends in environmental, social, and governance (ESG) offerings.

Institutions considering investments in or partnerships with data and analytics players face new and sometimes uncertain compliance expectations. For instance, when utilizing AI algorithms for credit decision-making tools, compliance teams play a pivotal role in ensuring the fairness of decisions and compliance with customer protection rules. Collaboration between compliance and strategy teams can inform assessments of these requirements, including the necessary investments in controls and AI talent.

The growing interest in environmental, social, and governance (ESG) offerings also presents both opportunities and challenges.

Collaboration between compliance and strategy teams is essential in designing transparent and compliant processes for creating and maintaining ESG investment products. Compliance teams, working alongside strategy teams, provide insights on aligning ESG factors with declared investment objectives, regulatory guidance, and processes for monitoring product performance.

Collaboration on articulating the largest regulatory risks associated with new or growing segments is a key starting point.

Compliance and strategy teams can work together to identify potential regulatory challenges and implications for the institution's planned investment actions. By explicitly designating compliance team members for strategically informed compliance insights, institutions can proactively address compliance considerations in areas earmarked for potential growth or investment.

In both areas, the key is to foster an environment where compliance and strategy are not just aligned but actively collaborate, leveraging their unique strengths to drive innovation and sustainable growth. This collaborative approach ensures that compliance considerations are seamlessly integrated into strategic decision-making processes, yielding a differentiated client experience and informed investments in fast-evolving areas.

Conclusion:

Banks have a significant opportunity to revolutionize client experiences by fostering collaboration between compliance and business strategists. While quick wins are possible, sustained impact requires a thoughtful approach to building systems, processes, and foundational capabilities that enable scalable collaboration.

The Missed Opportunity:

Unlocking Competitive Advantage:

Collaboration between compliance and business leaders can significantly impact two key strategic objectives: differentiating client experience and investing in fast-evolving areas.