Regulatory compliance and risk management – Role of BPM in driving efficiencies and flexibility for financial services firms

I’m excited about participating as a panelist at the FSOkx BPM Innovation Forum on September 17th.There is so much change currently happening in the financial services industry and BPM is perfect to help meet the tremendous challenges ahead.

In my 20+ years in the financial services industry, I have not seen so much change and pressure to meet regulatory requirements before. It is an upheaval of processes and systems. Making these large, complex changes to processes and systems are tough enough as it is, but when you see the number of regulatory changes coming down the pipe in the next 5+ years, it can be especially overwhelming! For example, there are more than 10 major regulatory/legislative changes happening in the next five years like Basel III, FATCA and Dodd Frank, all of which will have a direct impact on the way financial institutions do business. How can anyone keep up with these changes? In addition, how do businesses plan for these changes when there is still an influx of regulatory changes? How do you get visibility into your business to make these changes? These questions can make any IT director’s head spin!

This is why Virtusa is seeing more and more institutions leveraging Business Process Management (BPM) methodologies and tools to meet these enormous challenges. BPM provides transparency into processes and the ability to continuously change.

Here are a few examples of how BPM is helping with the regulatory compliance and risk management:

Compliance reviews and approvals: Derivative products were a significant contributor to the financial crisis five years ago. Regulators are more focused now than ever on how an institution conducts its business, i.e. new product approvals. What are the regulators looking for and how does BPM help? Regulators are looking for accountability and due-diligence. They want firms to be sure that they are managing the risk of the products effectively and have people accountable for the release of the products.

BPM is the solution: Instead of off-line reviews and manual routing of email approvals, BPM captures all of the information about the product, the review process, the approvals and post-implementation status, all of which are important for the firm to manage risk and to demonstrate accountability. BPM provides transparency and an audit trail of the approval process for regulators and compliance. Most importantly, using BPM allows for easier changes to the process application to match the regulatory changes.

Some firms have built repositories to hold approval documentation, but such architecture is not keeping up with the changes. These firms are looking at BPM. Other firms already built applications leveraging BPM technology for new product approval, non-standard transaction approval, trade booking reviews and more. Look for convergence of these approval systems across lines of businesses and products to better streamline the process.

Client on-boarding: Financial Institutions face the need for fundamental changes to their complex on-boarding processes; for example, the new Dodd-Frank External Business Conduct rules. Saddled with fragmented and isolated client, account and product systems, cumbersome workflow and a lack of visibility into complex processes, these firms cannot easily capture, maintain and provide the additional client data these new regulations demand – much less deliver efficient, client-focused on-boarding.

A BPM solution delivers a unified platform that streamlines the entire on-boarding process right through to credit and legal approval. BPM can help you automate and accelerate end-to-end on-boarding, ensure compliance with regulatory demands, deliver client-centric experiences and gain the flexibility you need to adapt rapidly to change. Here are some of the biggest benefits of using BPM for this challenge:

  • A single, complete view of the client across multiple accounts, channels, product, entities and geographies simplifies pre-boarding, reducing lead times to execute related transactions.
  • Dynamic processes automatically specializes rules, forms and tasks in real-time based on context, including the customer, channel, product, geography, regulatory jurisdiction or other business-defined criteria.
  • Embed other processes and business rules (i.e. Know Your Customer – KYC) to perform required customer background checks as well as business and risk management procedures for automated compliance.

Overall, BPM is ideally positioned to change the game for financial organizations contending with financial regulations or positioning themselves to be more agile in product innovation. How are you dealing with the constant ever-changing regulatory environment? Is BPM on your horizon?

For more information about the FSOkx BPM Conference visit their website:

Robert Wichtendahl

Vice President, BPM Practice - Banking Financial Services, Virtusa Corporation Robert has 25 years of technology and business experience, mostly in the Financial Services industry. For the past 14 years, Robert has led numerous BPM initiatives both from a product development and deployment perspective. In addition, he has designed and deployed BPM centers of excellence. Earlier in his career Rob focused on Data Warehousing, Reporting, Business Intelligence, Database Marketing, Operations Re-engineering, and Primary/Secondary Market Research providing him a diversified background. Robert holds a Bachelor of Business Administration in Management concentration in Finance from Adelphi University

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  • September 12, 2015

    Of course, what has happened through the financial crisis I believe is yet another reminder of the fundamental need for stronger ethics, risk management and regulatory compliance practices to prevail. Congress has responded once again, as it did after the Great Depression, with landmark legislation to raise the standards of business ethics in the banking and securities industries.

  • Rana December 8, 2015

    Thanks for helping me to see things in a different light.

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