In the first of a new series in which we spotlight the perspectives and expertise of our partners, global practice lead of client lifecycle management at First Derivative, Kevin McGuinness, debunks five myths from the world of financial services and explores the new realities of the sector.
There’s no place for out-dated thinking in the future of financial services.
MYTH: Banks refuse to adapt quickly to change
REALITY: Banks are far more agile than we might think
It was quite something to see how quickly our global client base and the banking community adapted to the new norm, during the Covid -19-crisis. Necessity is the mother of invention, and most banks really drove the enforced agenda for transformation in the digital space for KYC and AML much more flexibly and dynamically than we might have expected.
Now that we have returned to the original norm, or close to it, the digital change and technological enhancements banks rolled out, to facilitate core business activity – are largely considered an unquestionable value add and in certain scenarios ‘game changing’.
The fact that banks and financial institutions have adapted to the new norm with such agility, tells me that the industry can go wherever it needs to be taken.
And, that next big change decision across institutions may not be as frightening as once presented!
MYTH: Data is King
REALITY: Seize the data: the right data, at the right time with the right tools
Data is King – but only if it’s leveraged effectively, efficiently and safely. The right data set at the right time is so important.
“The problem with data is us humans; we have a tendency to fixate on certain data points without reference to the circumstances that are driving that signal”- David Collins, CEO at First Derivative.
That is so true, compounded further by the simple fact that data is also becoming increasingly complex – especially when you look at the rising regulatory scrutiny being placed on payment screening and transaction monitoring.
Looking forward, banks need the ability to not only dissect the data – but to cross reference and back test it against the customer profile and market activity, which on occasion could be across the entire lifecycle with the bank. That’s the scope of the ask on banks.
RegTech solutions and agile accelerators are going to be so important when it comes to effective payment screening and monitoring, ensuring transactional behaviours and real time activity remain in line with how customers were originally introduced to a bank.
I’m a big advocate of using technological tools, such as Napier’s to narrow the margin for human error as the data volumes spike and become more complex across the wider AML agenda.
MYTH: FinTechs and banks are too different to learn from each other
REALITY: Dare to be different – Banks could learn a lot from FinTechs
There are tools and technologies, and even just ways of thinking and looking at the world that FinTechs are embedding across their risk frameworks and banks are subsequently starting to implement in their own institutions.
For example, Electronic ID&V has been part of how FinTechs run their companies for years: it drives competitive advantage but also underpins compliance. What’s really interesting is that more established retail banks are now moving towards that electronic ID&V because during Covid-19, they could no longer ask customers to go in-branch with their passports and utility bills.
Now, in what has been an extremely short period of time, selfie uploads and biometric verification are part and parcel of the fabric of global banking – this is not the future, this is right now.
I feel this is just the beginning of an exciting period in which the technology and infrastructure that Fintechs have pioneered (and have ensured delivers for their industry) will be further adopted and embraced, even by the more established institutions.
MYTH: Financial services will unearth The Golden Source of Truth
REALITY: The Golden Source will always be a fluid and flexible journey
It’s very difficult for banks to get a ‘golden record’ or ‘golden book of records’ (a single source of data truth) for sharing and storing KYC information. In theory, you might put an agile workflow in place, so you have the necessary technology to align the data sufficiently; you might then engage the counter-party to identify missing data and complete a risk profile and with all these resources combined your single data source might be compliant. At this point, you’ve attained your mythical golden source!
But success will be short-lived. Tomorrow that source will be out of date, thanks to the just in time and perpetual ‘on’ nature of AML. There could be a change of ownership or a new person of significant control. As tempting as it sounds, a golden source of truth will never be possible purely because of the cyclical nature of KYC and AML.
MYTH: CRM and CLM should not and cannot be combined
REALITY: If you don’t combine CRM and CLM, your competition will
There’s a long-held suspicion that the tools and technology of CRM and CLM cannot be combined, and still stay bespoke, efficient and compliant. This isn’t true. Streamlined processes and workflows are eminently possible – and critical to any company looking to develop, potentially expand their reach, remain compliant and stay on top of AML.
With the right tools and thinking, it’s possible to use the slick functionality of CRM technology to enrich and reinforce the integrity of customer and client lifecycles. That’s what we’re here to enable at First Derivative: to bridge the gap between CRM and CLM to help drive compliance and efficiencies, and protect, nurture and develop each customer relationship.
Functionality fused with adaptability.
Customised solutions that breed consistency.
Rigorous compliance brought about by bold and progressive thinking.
It’s time to dispel those old and out-dated myths – and start to write a different story.
About the author: Kevin McGuinness is a senior delivery, transformation and commercial lead with two decades of financial services exposure and experience. He currently oversees a global consulting team at First Derivative with a focus on Client/Customer Lifecycle Management agenda (AML, Corporate KYC, Client Outreach/Onboarding, Contract re-papering and Trade Operations). His previous experiences include leading teams in managerial roles at PwC, Citi, FinTru and Ulster Bank.
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Photo by Shubham Dhage on Unsplash
