However, when it comes to regulated industries the investment needs to occur sooner in the customer journey. Compliance is so entwined with client onboarding that firms must prioritise the digital transformation of their risk and compliance functions if they want to deliver the experience being demanded by tech savvy customers and stay ahead of their competitors. In this article, I discuss what happens when digital transformation meets regulation.

As McKinsey & Company recently identified a ‘well-executed, end-to-end risk-function transformation greatly improves the customer experience, transparency and accountability, and can also decrease costs by up to 20%’ (source).

Early adoption of digital transformation allows businesses to focus on delivering a high quality customer experience, whilst being confident of remaining compliant and reducing resource costs. Where companies once saw an ever-increasing mountain of compliance and HR resource ahead of them, they now see a trusted and economic solution to their plans for reduced costs against increased expansion into their chosen regulated market.

Digital Transformation, (DT), is more than just exposing a few new API’s. Client onboarding alone has accelerated DT into the world of BigTech. Those regulated businesses that have progressed further than others in the DT arena already benefit from improved customer experience, operational efficiencies and increased time to revenue.

Digital transformation across markets

Digital Transformation in Banking

With digital technologies now impacting every aspect of financial services, and digital platforms becoming a crucial mechanism for engaging with existing and potential customers, institutions need to embrace the technologies and leverage the changes to nurture and strengthen a customer-centric approach.

• 41% of financial institution executives state that digital transformation initiatives have only been partially deployed

• 27% have managed to execute a limited deployment

• 11% are still in the design phase

• 4% of financial institution executives have no digital transformation strategy in place (source)

Traditional Financial Institutions will need to catch up with the digitally native challenger banks that already offer a fully digital experience to their audience through a ‘customer experience first’ approach, via digital KYC onboarding, without having to consider legacy back-end processes.

Digital Transformation in Payments

With PSD2 and GDPR now in action, questions are being raised about whether this was a success for the payments market and whether legacy structures need to be shaken up as the status of real-time payments and open banking initiatives in Europe become more complicated. Traditional payment firms will need to compete with Google, Apple, Facebook, Amazon and Alibaba as they figure out the best way to deliver API based payment services in an open ecosystem, especially when the suite of tools that artificial intelligence offers is being leveraged by Big Techs.

Payments firms will need to invest in cash management processes to provide newer and more innovative solutions for liquidity, payments and electronic banking if they want to survive.

Digital Transformation in Property

The use of digital innovation and technologies in all areas of property firms has seen a rapid overhaul during Covid-19. Online viewing, remote onboarding and verification are all key to providing enablement to a sector that was subjected to forced closure, as the Covid-19 lockdown was implemented. The front end of the property sector can easily be digitised and speeded up, but the back-end is more difficult, due to their regulatory requirements within mortgage lending etc. In order to take advantage of growth opportunities property firms will need to digitally transform all parts of the customer journey.

Digital Transformation in Recruitment

For many businesses, the pandemic has created challenges when recruiting or retaining talent. Firms have had to adapt quickly with limited resources to digitalise their hiring processes whilst ensuring regulatory compliance is maintained. As remote working is likely to be around for the foreseeable future companies will need to invest heavily in digital and remote employee onboarding tools to help improve efficiency and continue business-as-usual.

In addition, from the 31st December 2020, the UK will complete its transition period to leave the European Union (EU), and there will be greater regulatory pressure to ensure ongoing Right to Work compliance by the Home Office. A digital solution can deliver on all these challenges, allowing businesses to focus on growth rather than the distractions of manual processes.

In Summary 

Digitisation presents an unprecedented opportunity to elevate the role of risk, compliance and control by turning the vast growing streams of data into actionable insights. In order to take full advantage of digitalisation and to ensure risk compliance and control activities are not left behind, new operating models, systems and processes need to be deployed.

Those businesses who adopt digital transformation sooner rather than later can focus on keeping the customer experience at the highest quality, whilst being confident of remaining compliant and reducing resource costs and more importantly staying ahead of their competitors.