Compliance as a competitive advantage

Speaking at the RegTech Talks event at Leeds Digital Festival, our COO Mark Braddock talked about the evolution of compliance and three key areas where it can give organisations an edge over their competitors

For those who have been following the financial services sector for some time, the reputation of compliance is often clouded by perceptions such as cost-sponge, innovation inhibitor and corporate straitjacket. The number of regulations has only increased in recent years, which has added to the costs of abiding by them.

Of course this has not been without good reason. These changes ultimately safeguard end customers whilst nurturing transparency and trust in the market, and change was certainly needed in the wake of the financial crisis. However, the increase in general compliance costs has created fresh commercial challenges.

The turning of the tide

RegTech technology has long promised to change this landscape. With an estimated $76bn forecast to be spent on RegTech globally by 2022 (up from $10.6bn in 2017), new solutions are beginning to have a fundamental impact on the way compliance is perceived within businesses.

Core to this is how compliance is adjusting its cost to income ratio, with savvy firms fighting to make the most of early uptake. Indeed, compliance is emerging as a key battleground in the quest for competitive advantage.

At a high level, there are three key areas organisations are capitalising on to gain a competitive advantage from compliance activity:

1. Lowering costs

RegTech and automation have the ability to replace low-value manual chores to enable staff to invest their hours focusing on higher value activity making better decisions more efficiently. There are multiple examples of this in compliance, but taking Recordsure as an example, a big part of the potential for automation lies in automating the chores a reviewer has to undergo when they review customer interactions and written correspondence:

Up to 90% of an analyst’s time can be spent simply organising files and structuring data. Not only is this a huge time burden on a team but it is low-skilled work which is being undertaken by highly skilled staff.

This is a prime area that can now be automated, enabling reviewers not only to focus on the areas which genuinely require their expertise but speeding up processes by 90%. This is enabling firms to reduce the costs of remediation projects and past business reviews by up to 60% freeing up budget which can be invested elsewhere.

2. Improving brand reputation and customer care

Compliance data provides invaluable insights for customer care. Once you are able to harness this information, it can enable you to identify important segments within your audience such as vulnerable customers who might need additional support or complaints before they develop into complaints. This allows organisations to use customer care as a differentiator. As well as being a big win for customers, the benefits provide huge benefits commercially.

Quite simply, treating your customers well is good business. Companies with good customer care naturally tend to nurture good reputations as a result, which helps retain good customers and attract new ones.

On the other side of the coin, getting customer care badly wrong risks more than frustrated customers. The underpinning causes of poor customer care are often closely tied to regulatory shortcomings. Get it wrong and it can swiftly become a compliance issue, which risks regulatory audits, fines and highly damaging publicity. Setting a robust RegTech infrastructure helps mitigate against these risks and safeguard brand reputation from major controversies.

3. Optimising sales processes and messaging

The data stored within customer interactions isn’t just significant from a compliance perspective: it is also valuable for sales teams. Gauging a customer’s reaction is essential for sales. AI is now enabling business development teams to holistically understand what customers are saying as well as how they are saying it, with behavioural analytics working in tandem with the language that is used.

This provides sales teams with a powerful tool to gauge what messaging is most effective and what is failing to hit the mark. It enables them to identify cross and upsell opportunities at scale, and it provides them with macro insights that no single individual would be able to access.

Analytics like this also enables sales agents to self-review their work, with team leaders able to gain a quick understanding of how their team is getting on. Focusing on the most productive team members creates examples which can be shared with less successful agents to showcase what a great conversation looks like and revolutionise training with real-life examples.

The shifting role of compliance

Compliance officers will always be responsible for ensuring compliance and doing so as cost effectively as possible. Whilst that is never going to change, they are now able to rely on technology to change the cost to income ratio for the better. Compliance teams have come on a long way from cost creators: costs can now be reduced through automation with analytics providing important customer care support and commercially valuable sales assets that directly help increase revenue, with innovative firms already racing to press their advantage through early adoption.

Recordsure is conducting research to understand how disruptive technology is impacting workers in the financial sector at a team level on a day-to-day basis and whether this reflects macro trends. We’re keen to hear views from across the sector, so if you work within financial services or a similar regulated field you can share your insights via our Disruptive Tech & Financial Services survey.

The survey will only take 2 minutes to complete and we will be sharing findings with all contributors.