In an era where digital transformation is paramount, asset managers are recognising the indispensable role of automating Anti-Money Laundering (AML) processes.
Not only does this pivotal shift enhance Customer Experience (CX), but it also serves as a cornerstone for financial crime compliance (FCC), a critical pathway to resilience in the fiercely competitive market. This move towards automation helps in evading substantial fines and in significantly reducing the Total Cost of Ownership (TCO).
Napier AI, a next generation compliance platform, has outlined five compelling reasons elucidating why FCC automation is no longer optional for asset managers.
- Compliance as a Catalyst for Enhanced CX
The Financial Conduct Authority’s (FCA) Consumer Duty highlights the significance of protecting consumers from potential harms caused by behavioural biases, lack of knowledge, or vulnerability traits. By automating customer due diligence, the verification process becomes swift and seamless, eliminating repetitive manual data entry and documentation checks. This not only improves the onboarding experience but also aligns with regulations designed to prevent the exploitation of customers’ vulnerabilities, thereby enhancing the overall customer experience.
2. The High Cost of Non-compliance
Despite dealing with fewer transactions compared to retail banking, the wealth and asset management sector is not shielded from financial crimes or regulatory pressures. In 2023, the UK sector faced substantial AML fines totalling £3.8m, representing 7% of the Financial Conduct Authority’s total fines of £52.8m. The implications extend beyond financial losses, affecting the efficiency of legacy systems and distracting leaders from focusing on growth. Automating compliance processes helps mitigate these challenges, reducing the TCO by avoiding fines, remediation costs, and reputational damage.
3. Driving Down TCO through Automation
Automation significantly reduces the effort and resources spent on compliance processes. By decreasing false positive rates, compliance analysts can concentrate on genuinely risky activities. The adaptability of low-code solutions in AML operations allows for quick rule adjustments and configurations, enhancing market responsiveness. Consequently, the reduced need for manual review lowers operational costs and FTE requirements, leading to a noticeable reduction in TCO.
4. Competing with Digital-first Newcomers
The rise of FinTechs, payment firms, and neobanks has intensified competition, not just for retail banks but also for wealth and asset managers. The expectation for quick and smooth onboarding from younger generations underscores the importance of automating compliance processes as a key differentiator in a market where digital-first products are increasingly preferred.
5. Streamlining Operations with Better Data Management
The complexity of meeting regulatory demands is exacerbated by disjointed data across the fund distribution chain. Automating FCC processes not only streamlines onboarding and transactions but also enhances data hygiene, leading to improved CX and operational transparency.
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