Using Disruption for Good

For any business, the threat of industry disruption can loom large on the minds of those in charge.

What’s the next big thing? Will we be ready? How will we adapt? What does success look like? How do we get there?

But in 2020, most thriving credit unions have embraced the first wave of digital transformation disruption as technology advances. With the current health crisis driving even more demand for digital delivery of financial services, you’re probably finding that your credit union has to be even more open to change that before—that is, agile and maybe even industry-leading in technology adoption.

But there is a silver lining in the disruption of new technology and even in the scrambling that comes from outside market forces like the COVID-19 pandemic. In fact, why not see disruption as an opportunity?

With regtech, the opportunity created by all this disruption is right in front of you, ready to be put into action. Your credit union probably already deploys a core financial services system that manages your content and maybe even has expanded services like capture, search or process automation. With a smart strategy around regtech, which deploys technology-based solutions to regulatory challenges, you should be able to leverage your current technology to create meaningful solutions for your team.

When you say no to the fear of disruption, you’re saying yes to opportunity. Here are three ways regtech creates opportunities for your credit union.

1. Regtech helps reduce your costs.

According to a Global Regulatory Outlook 2018 analysis of financial institutions, 15% of employees and 10% of annual budgets were dedicated to keeping up with regulatory requirements. With a regtech solution in place, that cost and time investment is mitigated through a combination of intelligent automation and artificial intelligence.

What regtech looks like on the ground as it reduces costs:

• Optimizes employee time: Employees will spend less time in pursuit of compliance and managing the threat of fines resulting from noncompliance.
• Automates compliance processes: Beginning with data management, regtech lays out scenarios from the first data point and maps out the optimal level of oversight for each scenario. With the right data and a platform that supports agile adaptivity, a smart workflow will guide team members toward due-diligence guidelines like gathering the correct documentation along the way.
• Monitors accounts for the long haul: A regtech workflow provides continual oversight of the account and automatically notifies stakeholders when updates and documentation are needed, which reduces future audit vulnerabilities in real-time.

2. Regtech helps employees enforce governance.

The vastness of regulations that enter the financial industry each year can be dizzying, but all too often, the focus is on how to keep up with enforcing regulatory measures. However, in many cases, credit unions run into a problem before enforcement: having a process in place for storing and accessing regulations. All this content generates the need for a reliable and accessible reference library. Once that’s in place, your credit union needs a procedure for implementing each requirement.

What regtech looks like on the ground as it enforces governance:

• Operationalizes regulations for employees: Once employees are familiar with the policies and their roles in enforcing them, regtech helps put processes in place to oversee that employees are adhering to them.
• Centralizes reference copies of laws, regulations, policies and procedures in a digital library: Your core financial services platform should make all these reference pieces easy to access, which means they are in formats that can be opened, full-text searchable and available to anyone who needs it, no matter where they are.
• Manages the regulatory policies across the team: From the moment a regulation is published to the team, regtech will help track who has reviewed and acknowledged its existence, as well as notify employees of changes and prompt their review of new conditions.

3. Regtech helps you share documentation, manage risk and analyze data.

Regtech solutions mitigate access control risks and provide visibility into the whole process, which allows credit unions to react immediately rather than look at historical data for reporting. Even with the best processes in place, if your team is gathering documentation in paper form, reviewing it and opening accounts over the span of weeks, it’s nearly impossible to note trends or gaps in the system.

What regtech looks like on the ground as it shares documentation, manages risk and analyzes data:

• Identifies trends across the organization: With a robust regtech strategy in place, your credit union will have complete transparency in who has viewed regulations and where errors are commonly coming into the system. If you see a branch with an uptick in noncompliant accounts that also has a low rate of regulation acknowledgment, that can be remedied.
• Makes reporting as near to real-time as possible: Waiting for an audit to find out where you’re falling short is not ideal. With regtech, noncompliance is flagged from within the system and up-to-date reports and analytics can be viewed at any time.
• Identifies and manages fraud cases: Some core financial services systems struggle with implementing automated processes around potential fraud or situations that fall outside your policy. Regtech uses intelligent automation to pick up outliers and query responsible parties for review.

As digital transformation marches on in the financial sector, new waves of solutions will continue to disrupt. With regtech, the opportunity to seize disruption for the good of your credit union is in your hands.

Steve Comer is director of the financial services and insurance industries at CUESolutions provider Hyland Software, Westlake, Ohio. For more than 13 years, Steve has been dedicated to helping the financial services industry transform through using Hyland’s enterprise information platform, leveraging the industry-leading capabilities that OnBase provides in enterprise content management/content services, business process management, intelligent capture and case management capabilities. He is proud to lead one of the most dynamic teams at one of the most dynamic companies serving one of the most dynamic and transformative industries.