With regulations appearing different across countries and ecosystems, doing business across borders can be a challenge for financial organisations.
Alan Blanchard is Apiax’s UK Country Head. Apiax makes it radically simple to comply with regulations. Companies of all sizes and across industries can use its software to bridge the gap between compliance, business, and technology.
Here Alan shares his view on why banks need to work with digital-first solutions to ensure cross-border regulatory compliance.
Doing business across borders can be complicated, especially in highly regulated sectors like banking and finance. The challenges associated with providing compliant, cross-border financial advice and services have risen sharply in recent years. The pandemic and national lockdowns have only added to the complexities facing the sector.
With most staff now working from home, but still legally obliged to comply with the regulations of the host country or new meeting formats, ensuring compliance with the latest regulations has become a full-time job for many banks and businesses. Financial institutions need to keep up to ensure they continue to comply and retain their reputations, both nationally and internationally.
Sadly, to minimise risk, it is an all-too-common response for financial institutions and their teams to choose not to take that meeting, or to not expand into new business areas, with many retreating into only a few core markets. In other words, those financial institutions that have found an efficient way to manage financial regulation have a clear competitive advantage over their competitors.
Indeed, according to a recent study conducted by Apiax only 55% of financial services companies are currently actively marketing their services to clients abroad. So, let’s look at two, previously uncommon, scenarios which demonstrate how the pandemic and current regulations are hampering cross border financial services:
Digital banking – Restrictions around in-person meetings and travel restrictions have meant marketing banking services and products has shifted online. Financial institutions not only need to master the complexity of a slew of new regulations, but also find a way to ensure their teams stay compliant in the digital space. Finding ways to support modern banking applications, such as client advisory tools, online advisers, trading systems or mobile applications.
In many jurisdictions, such as in the UK and Singapore, there are specific rules governing online financial services and products, so organisations need to be aware of those regulations and ensure their advisory, sales and marketing teams are too. Regulatory knowledge needs to be up to date and, most importantly, accessible to anyone who needs it across an organisation.
Virtual and video meetings – The inability to hold face to face meetings with clients has caused a lot of confusion, with many organisations still not aware that most cross-border regulations are equally applicable to virtual meetings. According to Apiax’s survey, 49% of organisations in the sector admit to having difficulty understanding the legal rules around virtual meetings and only 32% have taken steps to cover current requirements.
Rules around communication channels are different for video, verbal, or written content. With some countries placing additional regulatory restrictions on what type of information or documentation can be shared with a prospect or client in a virtual setting. On top of that, the rules get more complicated if any activity is initiated by the bank, rather than the client.
Even if we take virtual scenarios out of the picture, traditional forms of compliance guidance, such as manuals, can quickly become out of date and provide ambiguous input. So, either a compliance team has the capacity to inform their advisory teams at short notice, or those teams must use their own judgment to interpret the restrictions. That is a huge risk, but the alternative could mean delaying or cancelling a meeting and losing the business.
How technology can help
Working with a digital compliance tool, for example a digital country manual, completely changes this dynamic. Planning even the most complex client interactions takes less than two minutes. It only takes a few seconds to cope with unplanned changes to the interaction, which can be as simple as the last-minute change to the meeting location.
A digital country manual can provide a client-facing advisor with a clear yes-or-no answer to whether an interaction is still compliant, at the touch of a button, instead of providing ambiguous, general information, without the need for the adviser to consult with his or her organisation’s in-house compliance experts.
Digital solutions to such complex problems empower financial institutions to easily serve clients in different jurisdictions, amidst changing circumstances. Financial institutions can not only work with the exact cross-border regulations they need to comply with, but also take advantage of new regulatory rule sets at the touch of a button. Enabling organisations to effortlessly expand their activities into new business areas, with the choice to expand coming down to subscribing to a new set of market-specific regulation, rather than risk hefty fines.
With the right set of digital tools, financial service providers can work with a single repository of digital regulatory rules. This enables them to achieve unsurpassed consistency, their distributed teams to work together seamlessly, and their client needs to be addressed efficiently.