By Andrey Brozhko, Head of Product at ClauseMatch
The world in 2020 is a phenomenal place. And it's all down to tech.
People can leave their wallets at home and pay for everything with their phones. You can get your Saturday night pizza delivered to your living room by drone. There are even toilets that flush and clean themselves.
But visit a compliance department, and chances are it'll look like it's stuck in a time warp. Spreadsheets, paperwork, and other manual tasks eat up huge chunks of the staff's workdays. Worse, new research has found that these manual processes could be costing a massive $22.75 billion in lost revenue.
It doesn't have to be this way.
Compliance technology, or regtech, has advanced by leaps and bounds over the past five years. Case in point, artificial intelligence, or AI, can be applied to fraud detection, credit decisioning, onboarding, and even trading. The time and cost savings these applications create could unlock $1.2 trillion in value by 2035.
But how do you go about choosing the right tech to bring your compliance department into 2020?
And, more importantly, what's the key to embedding it into your systems effectively?
While many compliance departments are stuck in a rut, it's not all bad news. More and more organisations are wising up to tech's potential for transforming their compliance function. Indeed, 57% of respondents told Accenture's 2018 Compliance Risk Study that investment in tech would be their top compliance spending priority in 2019.
The problem is that choosing, implementing, and sticking with tech can prove unexpectedly challenging.
ClauseMatch's CEO Evgeny Likhoded notes that part of the reason for this is that the compliance workload has become so huge compliance departments spend most of their work week firefighting.
"... this," he says, "leads to siloed solutions. If there's a lot going on around AML, people will look to resolving their AML issues. But the AML solution they implement won't necessarily address other compliance issues they may have."
More to the point, the regtech market — growth is expected to hit $12.3 billion by 2023 — is becoming increasingly saturated, which isn't necessarily a good thing.
As Julien Belhassen, Digital Compliance Officer at BPI France aptly put it when we interviewed him for our white paper Compliance 2030: Technology's Promise for Banking's Future: "There's lots of tech around. But I'm not sure many of these products are addressing banks' real needs."
Market saturation and an immense workload may make it harder to pick the right tech. But there are ways to facilitate the process.
GRC expert Michael Rasmussen advocates a three-step approach:
When it comes to compliance, organisations' current state tends to be fragmented and inconsistent. They often can't say how many policies they have, where they're located, or even if they're authorised, consistent official policies, or informal documents.
There can also be horizontal issues.
Policies may be looked after by one group while guidelines are looked after by another, meaning everyone has gaps in their knowledge. To confuse matters further, different groups may be looking at different angles. So, for instance, while legal might be looking at ways to reduce a law's business impact, compliance may be more concerned with keeping regulators on side, and business may be focusing on lowering costs and boosting revenue
The right tech should help these disparate or even conflicting sides meet in the middle.
More importantly, beyond convenience, tech should also fit into a process that works for modern business, integrating with other systems, cutting the amount of time and effort needed to get a job done, and making it easy to collaborate effectively across the whole organisation.
Having the right features and integrations is key to successful implementation. But one often overlooked aspect when choosing a technology provider is whether their tech works on a small scale.
Because there are legacy, mindset, and practical realities to contend with, implementing new tech is inherently disruptive. For this reason, to bolster your chances of success, tech should be able to be implemented gradually and on a small scale, before being deployed across the whole organisation.
The ultimate goal — digitalisation across your whole organisation — is important. But a successful roadmap should also have short-term goals.
Look at it this way. If tech can deliver quick, high ROI wins alongside your long-term goals, it can strengthen the case for change across the wider organisation.
With the compliance workload skyrocketing and smartphones, digital assistants, and other tech making our life easier and more convenient at every turn, it's increasingly hard to justify not implementing tech in compliance departments.
How we live, how we work, and what we can do has changed dramatically for the better. And compliance should benefit too.
That said, it's important not to go for a big bang, scorched earth approach.
Revolution is a bumpy road. But if you build momentum slowly, your journey to where you want to be will be much smoother.
At ClauseMatch, we're building a platform that saves time and slashes compliance costs by up to 30%, so staff can stop getting lost in time-sucking, repetitive tasks and focus on the bigger picture.
Book a FREE demo today and we'll show you how we can help your organisation work smarter in 2020.