For lenders and creditors, the regulatory landscape is complex, ever-changing, and critical to the success of the business. Maintaining regulatory compliance, especially as new technologies are evolving daily, is essential.
Unfortunately, many companies struggle to comply with the evolving regulatory landscape due to their existing technology infrastructure. Legacy systems, built, modified, and customized over many years, can add time, expense, and unnecessary complexity when working towards compliance with regulatory frameworks.
With data sitting in multiple systems, compliance often ends up being a frustrating game of Tetris, a never-ending array of downloads, reloads, manual updates, and rushed processes that can land a company in hot water with regulators.
Why are more creditors looking to get rid of antiquated tech? Because the benefits are significant.
Today, creditors and collections management companies alike need to keep a dizzying array of compliance and regulatory mandates front of mind. And upstart companies are looking to use technologies, from artificial intelligence to predictive analytics, to disrupt the industry. To compete, businesses need to take a hard look at old systems and inefficient processes to remain competitive.
Comprehensive solutions allow your business to gain that advantage through:
- Better forecasting that relies less on hunches and assumptions and more on data-driven tools that can crunch large amounts of data and generate reports, predictions, and actionable insights that help drive decisions
- Improved collection, accuracy, and use of data. Systems today can flag errors, centralize master data and ensure that there is a single source of truth when it comes to information about consumers
- Leveraging automation technologies to eliminate manual processes, reduce operating expenses, and lower the risk of human error affecting compliance. Automation can improve data collection and quality and free up employees from doing mundane, repetitive, and simple tasks
- Lessening reliance on paper. Centralized, cloud-based solutions allow for the reduction or elimination of paper files, a critical need as more businesses shift to work-from-home or hybrid models
To ensure that your company remains in compliance and avoids the consequences of non-compliance, it’s vital to ensure that your internal processes are up to date and flexible. You need processes – and systems that manage those processes – to be contributing to your success, now and in the future.
There are three systems that commonly cause regulatory challenges for financial companies. Now is the time to take a closer look at those systems and associated processes to keep your business in the clear.
Your Communications System
Communication is at the heart of any successful business. Your company is constantly connecting with third-party vendors, customers, and partners.
However, when it comes to sharing sensitive data, email is no longer a good option. Sending information via physical mail is also rarely a good choice, with the risk of sensitive content being lost or stolen en route. In addition, recent delays and slowdowns in the delivery of mail make such solutions even less reliable, especially if the information is needed in a timely fashion.
No matter what mode you choose, your sensitive information needs to be protected from being hacked, corrupted, or stolen.
Consider the life cycle that data has within your organization. It needs to be sourced or generated, collected, stored and archived, reconciled and managed. Data needs to be verified, secured, cleansed, and formatted. Your data rarely is fully at rest, but when it is, it needs to be protected just as rigorously as when it is being transmitted.
In addition, your communications and data need to be stored in such a way that they can be tracked and maintain a complete audit trail. Data needs to be maintained to allow for discovery, whether in paper or electronic form.
Financial companies have notoriously been among the last to embrace digital transformation. That reality means many businesses are relying on a convoluted combination of paper and electronic systems.
For accurate compliance, this hybrid of paper and digital files is fraught with potential errors.
Companies are also rushing to react to the October 2021 news that the U.S. Securities and Exchange Commission is taking a closer look at how Wall Street banks are tracking employees’ digital communications. The SEC sweep involves checking to ensure that banks are tracking work-related communications, including text messages and emails, and monitoring work devices.
All these communications issues related to compliance are likely to evolve as regulators expand and expectations for financial companies change.
One thing is clear. Your business needs a platform that provides a centralized system that allows authorized users a secure way to communicate with each other while maintaining full audit capabilities.
Your Internal Reporting Process
At many finance companies, internal reporting is still done manually, using Microsoft Excel spreadsheets to track and manage.
Such processes leave lots of room for errors and mistakes.
NAVEX Global reported in May 2021 that the median number of internal reports dropped from 1.4 cases per 100 employees in 2019 to 1.3 reports in 2020.
While that drop may seem insignificant, it’s the first time the organization has seen a drop in reports in its history.
The cause and impact of the drop are still not clear, but it should prompt each financial business to examine and determine if it’s an issue. With the increase in companies having employees work from home from the start of the COVID-19 pandemic, there may be less inclined to report errors and have fewer safeguards in place for monitoring.
Changes in the way work is done may mean changes are necessary for your internal reporting processes. Companies may need to look at existing controls and processes to accommodate remote workers.
The changes to the way work is done due to the pandemic can also change accounting conclusions. These issues are exacerbated by the ongoing economic volatility, inflation, supply chain challenges, and market variances.
All of these new factors can put a strain on your company’s internal reporting process and, thus, put you at greater risk of regulatory noncompliance.
Another factor to consider is your ability to manage how third-party vendors are affecting your compliance status. Third-party risk management is increasingly a part of regulatory compliance, meaning it needs to be a part of your internal reporting processes.
A sound third-party risk management program should include:
- A complete inventory of third-party relationships for your business
- A recording of the cybersecurity risks that your vendors could expose your company to
- A third-party risk management framework that is rules-based and includes guidance for current and future relationships
- Segmentation of third parties by potential risks and a detailed plan to mitigate those risks that’s in alignment with regulatory expectations and your firm’s risk tolerance
- An internal owner of third-party vendor management, including planning and process assessment
- Internal audit procedures that examine third-party risk
- Contingency plans for when a third-party vendor is determined to be a high-risk partner
Like with other internal processes, third-party vendor risk management frequently involves exchanges of emails, Excel spreadsheets, and attachments. While such practices are often convenient in the short term, if they are not memorialized, they are not maintainable, practical, or safe (from a regulatory perspective) in the long term.
The problem with such processes, whether related to internal reporting or third-party risk management, is that they are not automated, lack transparency, and are not easily accessible. They are also unlikely to be applied consistently or readily reviewed from a historical perspective.
Technology is an important consideration to resolve these risks. Technical solutions that allow for access to real-time data and third-party vendor insights help you understand risk at any moment. They also allow you to make better, informed decisions that can improve efficiency and demonstrate return on investment.
Your Disputes, Complaint, and Fraud Management
Managing disputes, complaints, and fraud is a complex and challenging area for many businesses. It’s imperative, both from general management and a compliance perspective, to keep all your files related to disputes, complaints, and fraud in one centralized and secure management platform.
For disputes and complaints, technology is the clear answer. There are multiple advantages to using a management platform, including:
- Increases in operational efficiency, using a unified, centralized, and consistent system for tracking, recording, and monitoring disputes and complaints
- Improved speed and service in working with customers. Better customer service also leads to increases in brand loyalty, affinity, and reputational scores
- Lower overhead costs, training expenses, and operating costs
- A centralized solution that tracks and reports on disputes, complaints
- Better analysis of trends, with the ability to pinpoint issues and patterns at an early stage, preventing smaller problems from becoming larger ones
- A reallocation of resources towards more mission-critical projects
Tracking reports of fraud is also critical. Customers have the right to dispute incorrect charge amounts, charges for products or services not received, incorrectly posted payments, late fees, and other errors.
One benefit of using a platform for dispute, complaint, and fraud management is the ability to integrate these solutions with existing finance systems. Given that investigation into such matters often requires the collection of information from multiple sources, a centralized solution helps to streamline processes and workflows and improve efficiency and accountability.
Full integration of case management systems with other financial platforms ensures faster, more coordinated, and complete resolution.
Some financial regulations have imposed deadlines. For example, the Fair Credit Billing Act requires banks to complete investigations into fraudulent or inaccurate payments within ninety days or two billing cycles, whichever is shorter.
Manual processes can limit your ability to give customers what they want: Fast, accurate, and timely responses and resolutions to their complaints and reports.
Using paper filing systems also means you’re exposing your institution to greater risk. Files left in offices, on desks, or, in today’s remote work, on home tables and countertops, are problematic. Such insecure systems can affect your processes, create disruptions and lead to mishandled or lost claims, and unwanted regulatory scrutiny.
Where NeuAnalytics Can Provide Solutions
NeuAnalytics has been providing dynamic solutions in the financial space for more than 15 years. NeuAnalytics offers a best-in-class, integrated platform for performance, risk, work, and vendor management with full audit support as well as a dispute, complaint, and fraud management suite.
Our integrated solutions ensure that you do not have to choose between increased collections revenue and improved compliance. Our platforms allow you to achieve both, whether that is with Regulation F, the General Data Protection Regulation, or whatever new mandates regulators approve in the future.
NeuAnalytics is the only vendor that provides solutions across the entire consumer debt lifecycle. We do not believe in seeing receivables management, compliance, and complaints, fraud, and disputes as an either/or scenario. Instead, we strongly believe that all those components can be managed better if they are managed collectively not individually.
The challenge with too many systems is that they focus exclusively on managing your receivables inventory. However, that’s not how companies operate today, or how regulators and consumers alike expect those companies to behave.
Such systems invite inefficiency and unnecessary investment in additional point solutions. Those myriad systems then need to be managed, integrated, and customized in an often-futile attempt to get programs to talk to each other and share data.
Our compliance management solution, for example, ensures that your business remains compliant with the dizzying array of federal, state, and local regulatory obligations. The NeuAnalytics solution validates that all of the key players – your employees and your third-party vendors – are remaining compliant with your policies and procedures.
We do more than traditional, legacy systems that simply track your policies and procedures. We use automated, industry-leading compliance management tools that cover your complete work ecosystem with better accuracy, better management, and real-time information.
Our solutions allow you to eliminate the Excel files, paper files, and hybrid systems that can plague your operation and lessen your adherence to compliance standards.
For fraud, complaints, and dispute management, our solutions let you streamline workflows. Our advanced predictive analytics and data modeling tools let you detect and stop fraud early and effectively.
Keep Compliance Risk Low with NeuAnalytics
At NeuAnalytics, we make collaboration with regulators a priority. We closely monitor the latest compliance developments and ensure that your team has what they need to remain compliant. To learn more about how NeuAnalytics can keep your company safe, efficient, and focused, contact us today.
