Once viewed as a luxury, the use of technology for compliance management within the financial services industry has now entered mainstream. The complexity of reporting obligations combined with the need for better document management, data security and effective communication has created the need for financial services firms (“FSFs”) to use technology as a means for better managing and running their compliance program. This article explores how FSFs, and any other regulated entity, can benefit from integrating technology to create a more effective and efficient compliance management process within the organisation.
The ease of managing, searching and retaining important company documents for minimum time periods is a critical requirement that must be met by all FSFs. Regulatory standards, internal policies and procedures that are crucial to the business are best centralised in one location for ease of access by staff. Manual procedures and controls that are used to facilitate document management processes are a notorious source of operational risk as it often leads to inaccuracies due to human error. The risk is heightened when the volume of data dealt with is significant. The variety of data management tools available through modern technology these days allow FSFs to address these shortcomings as processes and controls can be automated. Additionally, large volumes of data can be dealt with uniformity and particularity resulting in increased efficiency and accuracy. This not only reduces manual oversight, but provides the ability for FSFs to easily organise and manage the lifecycle of documents.
Periodic communication on regulatory updates, policies and procedures is also a fundamental aspect of running a good compliance program. Consistent enforcement of the program and regular compliance training is equally important to ensure that staff are well equipped with the relevant knowledge. Nowadays, software systems can be developed to disseminate this information and automate reminders to provide awareness and timely action that may be required. For example, the use of an online calendar can serve as a useful reminder for compliance related events whereas the provision of online user training may be an effective tool for educating and keeping staff knowledge up to date. The ongoing monitoring and testing of compliance policies and procedures is also essential to warrant the viability of a compliance program. Apart from the need to document test results, compliance gaps and corrective actions identified from the testing phase are much easier communicated and tracked for progress electronically.
Technological intervention also makes the month-end reporting process more efficient and accurate. GRC-based systems, such as Protecht.ERM, permit a more complex analysis of information through data mining and analytics. Dashboard reporting has become increasingly prevalent these days as it is highly interactive and able to provide real-time information regarding the business’ compliance performance. Role-based dashboards can be easily produced to the Board to display the overall compliance of the business and if any, the progress of remediative actions.
The final and unbeatable notion is the level of security technology can provide that paper processes cannot match. Most software systems have the capability to provide audit trail information on changes made to a document. Systems can be configured for an added layer of security by having authentication access or lock-down procedures, and disaster recovery mechanisms such as document back-up and retrieval.
Given the need for FSFs to contend with the increased volume of data, adequate document management and stringent reporting requirements, paper and manual processes simply cannot keep pace with the increasing complexity of these compliance requirements. In light of the evolving sophistication of technology, the integration of technology is indeed key for FSFs to run an efficient and effective compliance management process.