Overcoming the disproportionate regulatory burden in mid-tier banking

Mid-tier banks are fundamental to ensuring we have a competitive financial services industry, but they have taken a hit in the later stages of 2020.

Fitch Ratings took rating actions on seven mid-sized UK banking groups to reflect the downside risks to their credit profiles resulting from the economic and financial market implications of the coronavirus pandemic.

A strong mid-tier banking sector is a critical component to protecting the health of the industry, customer service, and innovation.

But mid-sized banks are under pressure on several fronts – lower business volumes, pressure on margins, and perhaps toughest of all a disproportionate regulatory burden that constitutes a barrier to growth.

Whilst there is recognition that a one-size-fits-all approach to banking regulation is hindering effective competition, mid-tier banks should not wait for proportionality. Technology can provide the answers they need now.

Realising the digital advantage in mid-tier banking

Digitisation offers the solution for three reasons:

  1. Digital transformations in risk create real business value by improving efficiency and the quality of risk decisions
  2. A digitised risk function provides better monitoring and control and more effective regulatory compliance
  3. Digitisation enables a distributed compliance approach, reducing the workload on compliance teams by placing compliance at the heart of the business – front of mind for every member of staff, informing every decision, instructing every interaction and shaping every relationship

Let’s look at each in turn…

Improving the efficiency and quality of risk decisions

Traditionally when banks have looked to improve risk decisioning, they have focused first and foremost on having the appropriate resources to identify, manage, monitor and mitigate risks.

This has put mid-tier banks at a disadvantage – as they don’t have vast teams of data and compliance analysts at their disposal.

For them efficiency is equally important, making sure their people are equipped with the tools they need to make quality risk decisions faster.

This means more effective management and use of quality data, automating processes, and incorporating data-driven risk decisioning at every stage of the customer lifecycle are essential.

So how to bring together data, collaboration and automation to improve a mid-tier bank’s ability to meet its regulatory requirements, whilst at the same time delivering commercial growth?

Give the compliance team a sophisticated decision engine to enable incoming data to have rules applied and tasks created, then distribute these tasks to appropriate front, middle and back-office staff, monitoring their completion and evidencing the whole process.

The automation aspect of this is fundamental because it brings efficiency, consistency and control to the areas it transforms.

It puts risk at the front line of the business and at the same time allows compliance analysts to focus on work that requires their skills and experience.


Improving monitoring and control with more effective regulatory compliance

A digitised risk function provides better monitoring and control and more effective regulatory compliance.

Application of workflow automation and applied technologies can be utilised to better address risk measurement and reporting, digitised monitoring and risk early warning, and increased transparency with better data access.

Whilst driving efficiency and value in the middle and back office, it also services to improve frontline banking.

For example, full and transparent collaboration in an organisation enables policy specialists to place KYC actions exactly where they need them and ensures front line Relationship Managers can really know their customers before they even engage with them.

Reducing the workload on compliance teams by placing compliance at the heart of the bank

Digitisation drives distributed compliance. What do we mean by this?

Distributed compliance means placing compliance at the heart of the business – front of mind for every member of staff, informing every decision, instructing every interaction, and shaping every relationship from pre-screens for new customer prospecting through to long-standing client development.

The benefits of this are many – faster and more efficient customer onboarding, an improved ability to meet the dual goals of regulatory compliance and customer experience, improved organisation-wide collaboration, and leaving compliance teams free to focus on work which requires their unique skillset and experience.

Distributed compliance puts knowing your customer back where it belongs – in the hands of Relationship Managers, thereby improving an organisation’s ability to meet its regulatory KYC requirements, whilst delivering advanced onboarding and improved new customer experiences.

How Artesian can help mid-tier banks level the playing field

Artesian is a leading data intelligence solution that tackles the complexities of client engagement and acquisition, onboarding, regulatory compliance, relationship management and ongoing client servicing.

The combination of pragmatic data science with the world’s best business information can help mid-tier banks solve complex, high-value challenges through cutting-edge technology that enables business rules and decisioning to be easily automated.

Artesian rests upon an established set of application components that allow frontline teams to apply business logic, search and decisioning rules to firmographic, internal and cloud-sourced company and people data.

Ingesting and interpreting such a broad and deep set of data means it can be transformed into actionable intelligence with proactive recommendations and valuable client insights.

The uniquely configurable software platform is accompanied by extensive professional services that automate your domain know-how, rules and thresholds, achieving ROI many times faster than using conventional methods.

Artesian banking customers are solving a multitude of challenges and utilising the platform to address the four key agile values –  from prospecting, client research and outreach, to CLM, risk screening and tracking, client onboarding and supplier management – Artesian is the agile banking solution you need.

Take Triodos for example. Triodos back, middle and front office teams utilise the Artesian platform for advanced credit risk data and company financial data via APIs, matching these against a series of its own approved decision rules to deliver an immediate summarised view of risk, flagging any potential problems that may arise.

Rob Keegan Triodos Bank pre-screening process

The result is that relationship managers can address any issues with the applicant sooner in the customer journey, making for a smoother and faster onboarding process.

In addition, the bespoke platform assists relationship managers in their mission to make money work for positive change by providing them with the deeper level insights they require to:

  • Grow new business by identifying sustainable sectors and organisations that meet their lending criteria
  • Rapidly onboard new customers, thanks to deeper 360° ecosystem intelligence
  • Truly understand the challenges customers face and the world they work in for hyper-personalised experiences and increased value delivery

Digitisation enables mid-tier banks to achieve higher levels of efficiency, effectiveness, and accuracy, and enables them to operate in a more lean and agile way, relieving the regulatory burden, contributing to their ability to meet escalating competitive challenges, and improving customer experiences.

The first steps toward that future can be made today, so get in touch.