Survival by Regulation

bank regulators governance

It’s the landscape after the battle. Countries have been ravaged by the virus, and individuals, families, and businesses of all sizes are scrambling to survive and recover. Banks, struggling with the direct effects of this crisis, are also expected by their governments to manage the distribution of state relief packages – while staying transparent and auditable throughout all their processes.

And while being fully open to regulatory inspection might sound like an unavoidable burden – it’s also an outstanding tool to ‘win’ the battle against the COVID-19 depression.

Govern away

Banks stand under a landslide of credit requests – and each credit decision they make needs to leave a paper trail, proof of action. If it hasn’t until now, pricing processes need to be navigated under strict controls and tight governance. In the post-pandemic economy, financial service providers need continuous visibility into what drove any customer offer – why a customer was offered a specific financial product at a specific price. They need this to stay agile in defining and deploying the best offers possible.

In most cases, this means a thorough overhaul of the slow, manual processes we have been guarding for so long – and a general restructuring of the pricing process, from models to the actual quote.

But don’t be mistaken; regulators are not the reason why strict governance needs to be observed by banks. Good governance practices are also the foundation for growth and innovation, creating a rock-solid base for the pricing process, and enabling constant, closely guarded improvement of processes and fact-based decision-making.

Agile is the new black

Governments have introduced extraordinary measures to provide credit options to small and mid-size enterprises and individuals seeking help in this troubling time. Banks are now expected to rapidly operationalize these new governmental policies, and quickly and effectively deploy these newly available funds to their customers in need.
For banks, this necessitates a dramatic shift in their decision-making and pricing processes. Taking months to deploy new prices to the market is no longer an acceptable business practice.

The key to accelerating this process to days lies in removing potential points of failure, like siloed disconnected systems, and automating manual bottlenecks. This would include data collection and recalibrating the pricing/risk models accordingly, which, in turn, will enable the organization to make pricing decisions instantly deployable through digital channels.

We would be amiss not to mention automation – when it comes to agility. A well automated, tightly managed system, that delivers rate changes across the pricing organization seamlessly is the key to well-governed flexibility. Automation is also a crucial tool that enables customer service excellence

I want to hold your hand

People and businesses are in desperate need of a sense of safety and reassurance from their financial service provider. Banks have the opportunity to save countless lives (and their own business in the process) by quickly and transparently turning these policies into new loan programs.

In the post-pandemic economy, a 100% fully digital banking experience is now table stakes. The high level of customer-centricity described here is crucial for banks to rebuild customer trust by coming towards them – instead of waiting until they reach out. With the amount and quality of data readily available in every institution, banks can proactively reach out to distressed customers with offers to restructure loans.

The benefits? Banks will increase retention numbers, prevent defaults – even though it might mean cannibalizing immediate profits. With the right technology, institutions can rebalance their books, make sure they exercise tight control over their books – while being customer-centric and empathetic. To do so, they need a high-quality stream of internal and third-party data, identifying patterns of distressed clients in real-time.

Digital employee experience

Much has been spoken about the digitization of the customer experience – but the global stay-at-home policy has prompted the need for digital employee experience. Enabling employees to work from home is no longer a nice-to-have employer-perk. It has to become a business-critical capability. Moreover, empowering the organization as a whole to access their systems from anywhere with a cloud-based software is now critical, and not just for the digital customer experience, but for well-governed business operations. Along with an easily accessible system, institutions cannot and shouldn’t want to survive anymore without an end-to-end pricing system; with a user-friendly interface, designed to enable a bank’s employees to seamlessly do their job, give excellent customer service, observe strict rules of governance, and ensure complete security.

Banks have been in desperate need of an agile, fast revamp for years now. Automated pricing agility, along with tight rules of governance are at the center when getting ready for a new regulatory era. Beyond regulatory readiness, an end-to-end analytical pricing system is also the cornerstone for outstanding customer service, retention, and fast speed-to-market. Banks have a unique opportunity now to turn caution to their advantage. Start your transformation today – and be ready for tomorrow.