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Compliance

7 Reasons to Switch to Compliance Apps instead of Cross-Border Manuals

Compliance is a word that’s thrown around leisurely in the financial services industry. Banks, financial institutions, FinTechs, and other businesses operating in the financial industry need to comply with KYC and AML regulations. For years, businesses have been relying on country manuals or handbooks that are jurisdiction-specific. These guidelines contain all rules and guidelines for businesses and financial services businesses. 

Handbooks are essential for legal and compliance teams, but you can also be a compliant business activity of wealth as asset managers, HR, Marketing, and even IT teams.

What Are Compliance Apps?

Compliance apps are tools for financial institutions that need to comply with KYC or AML regulations. AML and KYC directives keep changing frequently, so it’s hard for most financial institutions to keep up with them. They allow for faster compliance and decision-making and efficient knowledge sharing between internal parties, businesses, and other departments throughout the organization. 

Here’s why you should use compliance apps. 7 Advantages of Compliance Apps

1. Clear Guidance on Compliance

Compliance apps provide users with simple answers to confusing questions related to business activities abroad. The answers are visually pleasing and straightforward and provide answers for endless business scenarios. Compared to hand-held cross-country manuals and static text, compliance apps provide information in a much more consumer-friendly method. Compliance apps provide clear guidance on the information you require, which requires compliance time. 

2. Flexible & Scalable Coverage

Compliance apps can support the growing needs of businesses. With compliance apps, businesses can choose a variety of business scenarios and new countries and add as many users as needed to access the app. Compliance apps compared to country manuals can provide scalable information. Country KYC and AML compliance manuals can’t grow according to businesses. 

3. Immediate Answers Regarding Regulations

Compliance apps offer a user-friendly comparison between different cross-border scenarios on a single screen. It’s easy to find out answers to complex situations, which isn’t possible with country compliance manuals, and exploring cross-border situations often takes days. 

4. Compare Cross-Border Compliance Factors in Real-Time

Compliance apps users can compare compliance rules and regulations all over the globe in real-time without having to do tons of research. Easily find out where the circumstance best fits products and services. Cross-border country manuals can’t support exploring the comparison of scenarios.

5. Up-to-date Knowledge

By using compliance apps, banks and financial institutions can reduce the risk of missing out on important updates, and they’re automatically applied to the knowledge consumed by users on the app. If you compare this advantage of compliance apps with country compliance manuals, then these manuals need to be updated and distributed manually whenever any update comes in KYC and AML directives.

6. Facilitate Knowledge Sharing Internally

Compliance apps provide users with an increased chance of knowledge sharing among business teams with just a couple of clicks. Communicating with teams and sharing even the smallest of information becomes easy and quick. This can’t be done with country KYC and AML compliance manuals.

7. Answers Offered on Instrumental Level

Compliance apps offer business activities not for just one country, most of them provide insights on a product level, adding context and providing highly tailored guidance that all businesses and teams can benefit from. There is a certain level of complexity that country compliance manuals can simplify.

Conclusion: Advantages of Compliance Apps

Banks and financial institutions that don’t focus on compliance as much as they should tend to get fined. By using tools like compliance apps and online KYC verification software, banks and financial services businesses can improve their overall compliance process.

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Compliance

Building a Successful Digital Compliance Program

One of the biggest parts of completing digital transformation is by modernizing the compliance procedure. The digital compliance process should be in response to regulations set in place to prevent fraud, money laundering, terrorist financing, and so on. Customer Identification Program or more commonly known as KYC (Know Your Customer) is a major part of the compliance process.  

It is common knowledge that traditional methods of complying with these regulations can be time-consuming, expensive for the institutions, and result in poor customer experience. A complicated and inefficient CIP(Customer Identification Process) leads to an increased rate of customer drop-off and application abandonment during onboarding. Customer trends are changing and with the rise of technology, customers demand fast, efficient, and secure onboarding processes. Every 10 seconds added to the application process is directly responsible for a 5% increased customer drop-off rate. Building digital compliance services can help your businesses in various ways. 

That’s where the technological solutions come in. The right solutions like instant document verification technologies can help banks and other institutions streamline the process. It can also increase customer experience while making sure all guidelines are followed. To make the best out of these technologies, banks should follow best practices for digital compliance.

Strategy for Building an Efficient Digital Compliance Program

1. Build Separate Online and In-Branch Experiences

As banks focus on their digital banking compliance, they should also focus on re-defining the in-branch experiences. Customer preferences and customer expectations change based on the channel they are operating on and customers that operate online desire faster services in comparison to traditional banking. 

During a manual account opening process, banks hand out printed documents about the customer application, these disclosures are used in a PDF format by banks. When it comes to online account opening, a new tab opens for downloading the PDF disclosure of the application. This takes away the focus from the application page. Instead of doing this, banks should focus on building solutions that don’t take away customer focus from what they’re trying to achieve. 

While opening the account in the branch, the bank requires physical customer ID & address documents for verification. In a digital environment, most customers see this step as a barrier. Most customers abandon the application process instead of putting in the effort to submit digital documents. Now that the Federal Financial Institutions Examination Council (FFIEC) and other entities have allowed non-document verification, banks should look past documents. However, not using online documents for verifying customer ID can lead to an increased rate of fraud. This is a conundrum banks have to deal with. 

With third-party solutions like DIRO online document verification API, banks can build trust between customers that their personal information is safe. Also, instant document verification reduces the time significantly which in turn leads to a better customer experience. Technologies help in improving the process of digital risk and compliance.

2. Utilize Multiple Data Sources for Identification

To verify customer identity, which meets up compliance requirements, banks should look to leverage multiple data sources across the online account opening process. Usually, when applying for a new account, a user might be asked to provide information like name, date of birth, social security number, address, phone number, and email address. Banks need to utilize digital compliance services that use multiple data sources to cross-reference information.

Importantly, this automatic data comparison has to be behind the scenes without interrupting or slowing the customer user experience. DIRO verifies documents and cross-references customer data from thousands of sources.

3. Use Real-Time Data for Effective Risk Management 

Online banking is what the customers demand at this time. As banks roll out online account opening capabilities, they have to anticipate potential risks in the customer application approval process. Banks have to accurately assess risk to approve or deny applicants. 

To be able to do that, banks have to come across a range of data, including transactional data, social media, and more. This process can be automatic and occur in real-time, which helps both banks and customers. Customers love a fast and efficient process with as few barriers as possible and banks benefit from highly accurate and fast KYC compliance that reduces the possibility of fraud. Real-time data processing, reporting, and monitoring can improve risk management capabilities. Using real-time data for effective risk management is one of the best practice for digital compliance.

4. Encourage Greater Transparency with Digital Record Management

While digital channels may present compliance challenges. And online account opening allows record-keeping as opposed to in-person account opening. For example, DIRO provides 100% proof of trust for verified customer documents and then places the documents on the blockchain. Documents that are placed on the blockchain are immutable and easy to maintain. Record management is invaluable for compliance purposes, as banks can provide the auditors with highly detailed data.  

Making Compliance Easier with Automation

Regardless of the numerous advantages of digital banking, financial institutions sometimes hesitate to develop digital channels just because there’s a lot of uncertainty around compliance. By combining the right kind of technology with a compliance strategy, banks can successfully build digital compliance that keeps up with CIP and other regulations.