Compliance as a competitive advantage

Speaking at RegTech Talks during Leeds Digital Festival, Recordsure COO Mark Braddock discussed the evolution of compliance and three areas where it can give organisations an edge over competitors.

For those who have followed financial services for some time, compliance has often been associated with cost-sponge, innovation inhibitor and corporate straitjacket perceptions. The number of regulations has increased in recent years, adding to the cost of abiding by them.

Those changes have had good reasons. They safeguard end customers, nurture transparency and trust in the market, and change was needed after the financial crisis. Even so, higher general compliance costs have created fresh commercial challenges.

The turning of the tide

RegTech 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 affect how compliance is perceived within businesses.

Central to this is compliance’s cost-to-income ratio, with firms seeking to make the most of early uptake. Compliance is becoming a battleground in the search for competitive advantage.

At a high level, organisations are looking to capitalise on three areas: lowering costs, improving brand reputation and customer care, and optimising sales processes and messaging.

Lowering costs

RegTech and automation can replace low-value manual chores, allowing staff to spend more time on higher-value activity and make better decisions more efficiently. In compliance, Recordsure’s example is the reviewer work involved in reviewing customer interactions and written correspondence.

Up to 90% of an analyst’s time can be spent organising files and structuring data. This is a large time burden and low-skilled work being undertaken by highly skilled staff.

That work can now be automated, allowing reviewers to focus on areas requiring expertise while speeding up processes by 90%. This enables firms to reduce remediation and past business review costs by up to 60%, freeing budget for other uses.

Improving brand reputation and customer care

Compliance data provides valuable insights for customer care. Once firms can use this information, they can identify segments such as vulnerable customers who may need additional support, or complaints before they develop into complaints.

This allows organisations to use customer care as a differentiator. Treating customers well is good business: it supports reputation, retention and acquisition.

Poor customer care creates risk beyond frustration. Its causes are often tied to regulatory shortcomings. If firms get customer care wrong, it can become a compliance issue, risking audits, fines and damaging publicity. A strong RegTech infrastructure helps reduce those risks and protect brand reputation from major controversies.

Optimising sales processes and messaging

Customer interaction data is significant beyond compliance. It is also useful for sales teams. Gauging a customer’s reaction is essential for sales, and AI can help business development teams understand what customers are saying and how they are saying it, combining behavioural analytics with language.

This gives sales teams a way to gauge which messaging is effective and which is not. It helps identify cross-sell and upsell opportunities at scale, and provides macro insight that no individual could access alone.

Analytics also enables sales agents to review their own work. Team leaders can see how teams are performing and use productive team members as examples to show what a good conversation looks like, improving training with real-life examples.

The shifting role of compliance

Compliance officers remain responsible for ensuring compliance and doing so cost effectively. That responsibility is unchanged, but technology can improve the cost-to-income ratio for the better.

Compliance teams have moved on from being only cost creators. Costs can be reduced through automation, while analytics provides important customer care support and commercially useful sales assets that can help increase revenue. Innovative firms are already pressing their advantage through early adoption.

Recordsure was also conducting research to understand how disruptive technology affects workers in the financial sector at team level and on a day-to-day basis, and whether this reflects macro trends. The survey was open to views from across the sector, including people working in financial services or a similar regulated field, took 2 minutes to complete and promised findings to contributors.