bankingciooutlook

Four Ways to Optimize Risk and Compliance Efficiency in Banks

James Robertson, Banking CIO Outlook | Tuesday, December 22, 2020

Banks need to implement client risk rating (CRR) methods that take derivation between actual and anticipated product use and transactional behavior into consideration to handle regulatory needs.

Fremont, CA: The result of the global financial crisis has resulted in regulations that banks have to follow. These regulations are introduced throughout the different aspects of the banking business model to help monitor financial giants.

Here are four ways to optimize risk and compliance efficiency in banks and financial institutions:

Expediting Screening

AI-based tools can significantly minimize the rate of false positives by pre classifying detected alerts and produce notes that detail why a false positive can be removed.

Automating Alert Handling

Robotic process automation (RPA) can provide more efficient alert handling. Analytics embedded in the software can optimize filtering and can help documentation and reporting, decreasing manual work.

Enhancing Transaction Monitoring

AI-based transactions monitoring system can decrease false-positive rates by enhancing data quality and improving detection rules, identify behavioral patterns that optimize segmentation, recognize direct and indirect connections between customers and other entities using network analysis and simplify reporting by incorporating evidence into a single document.

Enhancing KYC Outcomes

Digitizing the different steps of the Know Your Customer (KYC) process can ease the capacity and cost pressure by efficiently collecting client information. Mobile apps, web-based portals, and video tools can help retail banks to collect KYC relevant authentication information from customers. Automation technologies can also help corporate institutions to include public registers, external data providers, and KYC utilities into their workflows.

Banks need to align KYC standards across the location to leverage digital KYC use cases and detect clients with high-risk profiles. Banks need to implement client risk rating (CRR) methods that take derivation between actual and anticipated product use and transactional behavior into consideration to handle regulatory needs.

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