Where there is data, there is regulation. Most financial institutions including banks and insurance companies deal with a complex web of external, local and global regulations, all requiring them to submit regular reports about their business to comply with KYC, AML, CFT, and other regulations..

However, due to obsolete IT infrastructure, data silos, and lack of data taxonomies, and manual processes, meeting these regulations proves to be a far more challenging task – and financial institutions are not prepared.

In this detailed post, you’ll get an overview of how banks prepare data and how it is no longer effective. Additionally, you’ll get to know: 

Let’s get started.   

Expectations in Regulatory Reporting  

The increasing complexities of financial crimes coupled with multiple financial crises have escalated stricter guidelines for institutions. The banking world has experienced tougher regulations that demand comprehensive capital analysis reviews, comprehensive liquidity reviews, supervisory reviews, and evaluation processes among others. All these regulations, whether it’s the BCBS 239, the CCAR, Basel III or MiFID II are inherently data-centric. 

These regulations were brought in for multiple purposes – for instance, the Dodd-Frank is to ensure transparency in record keeping while the CCAR and BCBS 239 are focused on data quality, data lineage and overall data management with a special emphasis on proving and improving data governance.   

These regulations have imposed a new mode of operation adding new complexities to regulatory compliance. There is more to come. As digital transactions and online commerce take precedence over traditional banking, these compliances are expected to increase to counter money laundering and financial crimes carried over the internet.   

Put simply, banks are required to keep up with technology and the evasive world of digital finance. The problem? Financial institutes are not. Not for cultural transformations, not for technology transformations, not even for data transformations. The pace is slow, resources are limited but the pressure to comply is mounting. Failure to demonstrate a compliant solution can result in massive regulatory and reputational risks – including hefty fines, imprisonment of executives, and loss of reputation.   

Cost of Failing to Meet Regulatory Compliance Standards   

The cost of compliance to the regulatory standards consumes approximately 20% of “run-the-bank” cost base of a financial services provider and about 40% of “change the bank” costs for ventures presently in progress. Dodd-Frank and BCBS-239 support consumer protection; however, call for investment to manage at scale, placing a burden on the profits of the financial sector. Failing to comply has resulted in more than 200 billion dollars in fines during the past five years and has also caused an increase in the concerns for personal accountability for the banking executives.     

Cost of Failing to Meet Regulatory Compliance Standards

Local banks are also not exempted. The American Bankers Association recently conducted a survey of small American banks and established that approximately 50 percent of small American banks have dropped their product offerings, lowered staff because of the stress of regulatory compliance, and the consumer support is not up to the mark needed for compliance.  

Regulatory reporting demands a swift merger of varied data available throughout the financial organization. This can be an extremely costly and resource-intensive task. Even when financial organizations are spending approximately 4.5 billion dollars annually on compliance only, they are still paying billions of dollars in fine. Diverse data management for regulatory reporting is a multi-tiered challenge for the modern-day financial sector. 

Key Data Preparation Challenges in Regulatory Compliance   

Experts agree that resources in financial institutes need to spend 80% of their time in analytics review (including reviewing data for sanctions compliance), while 20% on data preparation (which encapsulates operations as data cleansing, data standardization, data profiling, data matching etc.). The sheer volume and complexity of data coupled with limited human and technological resources have resulted in teams spending more time on data treatment and preparation rather than on analytics. This mainly because regulatory reporting is still considered a subsidiary, backside function handled manually by IT resources working in silos. But there are other hurdles too – hurdles that are preventing organizations from establishing a foolproof regulatory system.   

Over the years, we’ve worked with several of the largest banks and financial institutes in the US and across the globe to help them with data quality challenges. Almost every client we’ve worked with cited one or all of the following hurdles:     

Disparate Data Sources: A wide network of vendors and partners and a spread of multiple branches means banks are dealing with disparate data sources. They are struggling with the consolidation of data from multiple sources including Excel files, relational databases, and cloud applications. For every report or analytics review, banks need to collect data from these multiple sources which could take up to months due to data integration, conversion and transformation challenges. 

Reliance on out-dated Systems: Too often, traditional financial institutions (FIs) are still getting by with the same systems they’ve had in place for the past 20 or 30 years, so it’s hardly surprising that these solutions aren’t well-equipped for today’s digitally-focused, omni-channel environment. 

Financial data is stored in obsolete mainframe systems. In fact, an overwhelming majority of the top 100 banks in the world depend on it. The problems exacerbate further when data is moved between or stored across on-premise relational databases and cloud web applications as it presents greater data conversion challenges, requiring more person-hours and costs.

Data Exists in Silos:  As banks rely on legacy systems, their business data structures are often fragmented, resulting in data silos.

For instance, some banks still don’t have a centralized data management system for a consolidated view of each stakeholder information such as customers, vendors, partners, and accounts. This means that at the time of analytics reviews, the organization will have a difficult time pulling and consolidating this data from multiple systems. Siloed data makes for one of the most time-consuming activities as firms struggle to extract data from a host of apps, platforms, and systems.   

More importantly, data silos exist independently, each with their own unique identifiers - customer codes, social security numbers, or other proprietary data – that act as a major barrier for accurate record linkage. As a result, the end users face a tedious task in reconciling conflicting customer or account information, increasing the risks for poor customer tracking, fraud and identity theft, and regulatory non-compliance.

Poor Data Quality: For most financial institutions, data quality remains an ongoing challenge, with its integrity degraded by inconsistent taxonomies, inaccuracy, incompleteness, and duplication. According to a study conducted by Oracle Financial Services and the Center of Financial Professionals, inconsistent data, and poor data quality resulting from siloed systems are two of the barriers to achieving BCBS 239 compliance.

The siloed systems, thus, can bring their own problems of inconsistent file naming conventions, disparate formats and other redundant data that can undermine the reliability of existing data as it gets updated with new, incoming information.

Identifying duplicates becomes an almost impossible task. End users must spend considerable time to determine if two or multiple records refer to the same entity or not which could be in the form of different order of numbers and/or letters and other variations. Alternatively, there could be seemingly similar duplicate records with slight variations that are in fact different entities altogether. 

Data Preparation Still a Manual Process: There is still a heavy dependence on manual methods to prepare data. Excel sheets and SQL programming are still being employed in aggregating complex data – which break apart beyond a few thousand records and thus unstable or require significant refinement for scripts to work smoothly across complex datasets. . This manual approach prevents financial institutes from keeping up with new demands – both in terms of customer and regulatory expectations.   

Regulatory reporting demands data to be clean, accurate, complete, and consistent. But one of the biggest roadblocks to meeting these demands is impaired technology coupled with a stubborn insistence of sticking to outdated data preparation methods that worked well in the past but are no longer helpful in managing current data needs.   

Either the technology in use doesn’t have the breadth of data quality solutions - ease of exporting data, data standardization and data deduplication through a deduping software – or it may not be robust enough to run real-time API workflows to automate data quality tasks with minimal false positives.

Why Excel and SQL Programming are No Longer Effective Tools for Data Preparation   

The Federal Reserve and regulators are now less tolerant of manual solutions and workarounds that are no longer a match to the scope, volume, and granularity of data that need to be submitted to regulatory authorities.   

Adding fuel to fire is the counter-intuitive reporting architecture of many firms that still delivers individual reports by business area, preventing the accurate calculation and reporting of risks across entities or by product mix. Plagued by disparate systems, inconsistent data sets, manual data entry errors, and mounting compliance pressures, professionals spend a significant amount of time and effort in data aggregation and reconciliation via Excel or SQL codes.   

Highly limited in the face of vast volumes and varieties of data, common technologies like Excel first introduced 40 years ago to complete regulatory reporting can no longer meet the required speed and demands. Some of the main challenges of using these technologies are:   

Limited Data Preparation Features: Excel is not intuitive and requires the user to create formulas and rules for every transformation. For instance, it takes multiple formulas and repetitive actions to remove white spaces or accidental punctuation marks in text fields. Moreover, unlike ML-based solutions that evolve with time to encapsulate new problems, Excel is still more or less the same as it was 40 years ago. It has limited data preparation features such as integration with other data sources, or profiling, or even click-based data cleansing. Lastly, it cannot be used to dedupe data which is one of the leading challenges professionals face when consolidating data from multiple sources.   

Data Lineage Limitations: One of the key requirements of regulatory reporting is visibility. Stakeholders want to know exactly how data has been transformed before being submitted to a regulator. Excel does not automatically keep records of transformations. Users often have to go back through their work and manually demonstrate the steps they took to reach the desired level of accuracy. Financial institutions must use data preparation software that automatically records all transformations and preserves the structure of this data.   

Requiring Expert Users: Both SQL and Excel require expert/advanced programmers or users making the regulatory reporting an IT task instead of a business task. Not every financial or regulatory compliance analyst is technically sound in SQL or in data management for that matter. Data analysts or programmers on the other hand are not owners of compliance data and therefore do not have as robust an understanding of the nature of this data as do the people owning it. This crisscross between IT and financial analysts is one of the leading causes of siloed data preparation that hampers a progressive approach to data management.   

Organizations must acknowledge the fact that common technologies like spreadsheets and SQL are only effective when preparing data at a small scale – for regulatory reporting – which demands accuracy – they are hardly ideal. Today, financial institutions need automated, ML-based solutions that are powerful enough to allow for agile data preparation while allowing your departments to easily consolidate, merge, dedupe, and clean data for regulatory compliance. The platform must be intuitive, allows for easy integration and an easy-to-use interface that does not depend on the expertise and availability of programmers or IT experts.   

Approaches to Remediation – ML-Based Self-Service Data Preparation Tools   

While most experts talk about culture change, data transformation journeys, and a complete overhaul of infrastructure, we believe the right approach to remediation lies in first acknowledging core problems with data quality and understanding challenges with regards to processes.   

For instance, firms can start by improving the quality of their data before moving on to bigger transformation initiatives like migrations or new infrastructure implementations. As the saying goes, the devil is in the detail, and in this case, it’s not the infrastructure or technology that’s hampering progress, it’s quite literally the details in a bank’s data source.   

The first step to remediation, therefore, is in preparing data for compliance. And this can be done by using a top-in-line self-service data preparation tool that allows for:   

The Bottom Line….   

Regulatory reporting demands data accuracy and integrity, both of which cannot be achieved via manual processing of data. Financial firms need data preparation tools that can evolve with time and allow them the flexibility of preparing massive volumes and multiple varieties of data as effortlessly as possible. The goal is to minimize repetitive tasks to make time for the core business.  

outh Korean consumers get an even more diverse range of products from trusted sellers around the world

Payoneer (NASDAQ: PAYO), the commerce technology company powering payments and growth for the new global economy, and Coupang, one of the largest e-Commerce companies in Asia, today announced a new partnership that will provide hundreds of thousands of sellers from across the globe with the opportunity to more easily expand and sell into South Korea. By leveraging Payoneer’s technology and expertise to enhance Coupang’s payments capabilities, sellers on Coupang can now enjoy more seamless payments for their cross-border businesses.

One of Asia’s leading e-Commerce companies, Coupang has over 17 million active customers as of the second quarter of 2021 and generated $15.6 billion in revenue over the last twelve months. South Korea, Coupang’s primary market, is ranked as the fourth globally in e-Commerce sales and represents an exciting market opportunity for international sellers looking to reach South Korean consumers who demand a sophisticated, diverse, and global range of products.

Through this partnership, sellers in Payoneer’s extensive ecosystem spanning countries including China, Germany, Japan, the UK and the US will benefit from faster access to funds and greater flexibility in managing multi-currency payments when selling on Coupang. These essential tools enable sellers to more easily expand into new markets both within and outside of the APAC region. Furthermore, sellers will gain access to streamlined onboarding onto Coupang through Payoneer’s Green Channel program, which includes assistance from a specialised support team to tap new growth opportunities, leveraging Coupang’s position as Korea’s most popular online retail destination.

Nagesh Devata, VP for APAC, Payoneer, said: “Payoneer continues to cement its position as a market leader and innovator for digital commerce and partnering with the world’s fastest moving and growing companies is a key part of this. Coupang is at the forefront of the e-Commerce wave and has been able to capitalize on the new wealth of opportunities available to leading platforms. Payoneer’s technology and Green Channel service will help to supercharge Coupang’s global growth.”

Gerald Hoe, Head of Global Marketplace, Coupang, said: “Our mission is to create a world in which customers ask, how did we ever live without Coupang? Delivering the best customer service is crucial to realizing this goal and our partnership with Payoneer reflects Coupang's commitment to wowing the customer. Growing our global seller community will enable us to further broaden our product selection for our Korean customers. In addition, providing our sellers with a streamlined payments experience and access to Payoneer's Green Channel program means we can onboard quality small businesses faster and enhance our growth in a safe way.”

Leading anti-money laundering specialist SmartSearch is recruiting a further 20 new staff before the end of the year as a result of its exceptional business growth.

There are numerous roles available, ranging from graduate and entry level positions, right up to highly skilled positions. Some of the key areas that SmartSearch is recruiting in include: technical teams, customer success, market engagement and finance.

The business now has 177 staff, and has already recruited 85 in 2021. The recruitment drive is due to SmartSearch recording the best year in its history in 2020, and 2021 looks on track to be another record-breaking year.

Some of the new appointments will be based in SmartSearch’s headquarters in Ilkley, and some will be based in its original office in Guiseley which has recently undergone a renovation. The makeover has  installed new breakout areas, and collaborative workspaces, and has been designed with employee wellbeing in mind.

Dan Jackson, recruitment adviser at SmartSearch is heading up the recruitment, and explained how the RegTech specialist is open to recruiting from outside of the industry.

He commented: “We have such a range of great roles available, experience in the sector is not essential. The key for us is finding passionate, smart, customer focussed people who fit into our culture.

“We encourage those who join us to explore different roles and paths. For example, people have joined in one team, decided they are better suited to another role and transfer internally, so there are no limits on what our staff can achieve.

“Our team is supported professionally to develop with training and mentoring, but the wellbeing of the person is also really important to us. With this in mind, the new office has been designed to provide a space where our team can be both productive, and also has space to relax and be creative.

“This is a really exciting time to be joining SmartSearch. We’re constantly bringing in new clients and improving and implementing new innovations to cement our position as the industry leading anti-money laundering software.”

Report evaluates content services vendors’ Completeness of Vision and Ability to Execute

Hyland has been named a Leader in the 2021 Gartner®  Magic Quadrant™ for Content Services Platforms*, marking the 12th consecutive year Gartner has recognised Hyland as a Leader within the evolved content services report.

“We believe Hyland’s positioning again in this year’s Leader quadrant reflects our success in helping organisations modernise with end-to-end content services solutions,” said Bill Priemer, president and CEO of Hyland. “This allows customers to achieve a complete view of their content while reducing the cost of doing business and enhancing employee experience. We see this as another indicator that our strategic investments and continuous innovation in R&D are fuelling digital transformation for our customers.”

Hyland’s investments in innovation are bringing to market the Hyland Experience Platform, which will deliver feature-rich and rapidly deployable cloud-based content services. The company’s many unique capabilities within content services, including open-source platforms, enablement of low-code application development and repository scalability and federation, are positioning Hyland as the go-to provider for enterprises whose goal is to bring its content management under a single provider.

“Hyland is well positioned for the future and to support our 16,000 customers no matter where they are in their digital transformation journey,” added John Phelan, executive vice president and chief product officer at Hyland. “According to Gartner, 30% of enterprises will consolidate their traditional enterprise content management provider in favour of a content services platform that works across content silos.** Today, and with the development of Hyland Experience Platform, we’re excited to further assist our customers and the market along their digital transformation journey.”

*Gartner Inc., Magic Quadrant for Content Services Platforms, Michael Woodbridge, Marko Sillanpaa, Lane Severson, Tim Nelms, October 18, 2021

**Gartner Inc., Content Services Strategy: An Enterprise View of Content-Centric Markets and Applications, Tim Nelms, April 28, 2021

Gartner Disclaimer: Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner's research organisation and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.

Gartner and Magic Quadrant are registered trademarks of Gartner, Inc. and/or its affiliates in the U.S. and internationally and are used herein with permission. All rights reserved.

Beta program now open for BlueSnap’s 47th acquiring country

BlueSnap, a global payment technology company committed to helping B2B and B2C businesses accept and optimize digital payments around the world, has received licensing and bank approval for local acquiring in Israel.  

Israel becomes BlueSnap’s 47th local acquiring country. Now businesses operating in Israel can process digital payments locally, saving them up to 2% in cross-border fees. Businesses may also benefit from increased sales as local acquiring helps improve payment authorization rates.  Today’s announcement also makes it easier for businesses already using BlueSnap to make their products and services available in Israel. 

Israel’s thriving tech community makes it an ideal market for businesses to innovate and expand globally. BlueSnap itself originated in Israel in 2002 and has a growing team in Herzliya with over 80 employees and a newly renovated office.  

“We’re excited to be expanding our local acquiring capabilities in the Israeli market, especially with BlueSnap’s deep roots in Israel.”, said Ralph Dangelmaier, CEO of BlueSnap. “More businesses than ever are expanding globally and the rate of customers purchasing goods and services online and from overseas sellers is accelerating. But international payments are extremely complex, and businesses face many challenges as they try to accept payments globally. BlueSnap is focused on helping businesses optimize their global payments; increasing sales and reducing costs – so that they can focus on growing their business and serving customers.”

BlueSnap’s All-in-One Payment Platform is specifically designed to help businesses accept payments domestically and internationally. Businesses only need to do one integration and will receive one account and one contract to accept payments in 200 geographies with 100+ currencies and 100+ payment types. As the business grows into new territories, there are no additional integrations, no additional accounts to set up and no struggling with multiple reports to reconcile.  BlueSnap’s network of global banks and local acquiring, paired with best-in-class tax solution, fraud protection, chargeback management and accounts receivable automation deliver businesses a better way to accept payments on a global scale. 

Mastercard customers can now enable consumers to buy, sell and hold cryptocurrency, deliver unique, crypto-centric loyalty opportunities, and streamline issuance of branded crypto debit and credit cards

Today at Money20/20, Mastercard (NYSE: MA) and Bakkt (NYSE: BKKT) announced a multifaceted partnership to make it easier for merchants, banks and fintechs in the U.S. to embrace and offer a broad set of cryptocurrency solutions and services. Consumers, in turn, will experience expanded access to the digital asset ecosystem.

Bakkt extends Mastercard’s ecosystem of cryptocurrency partners enabling Crypto-as-a-Service, which provides quick access to cryptocurrency capabilities. Through the power of the Mastercard network and Bakkt’s trusted digital asset platform, Mastercard partners will be able to offer cryptocurrency solutions. These include the ability for consumers to buy, sell and hold digital assets through custodial wallets powered by the Bakkt platform and streamlined issuance of branded crypto debit and credit cards.

Mastercard will also integrate crypto into its loyalty solutions, enabling its partners to offer cryptocurrency as rewards and create fungibility between loyalty points and other digital assets. This means that consumers can earn and spend rewards in cryptocurrency instead of traditional loyalty points and seamlessly convert their crypto holdings to pay for purchases. This is the latest move by Mastercard to bring innovative loyalty options to consumers that align with their passion points.

“Mastercard is committed to offering a wide range of payment solutions that deliver more choice, value and impact every day,” said Sherri Haymond, executive vice president, Digital Partnerships at Mastercard. “Together with Bakkt and grounded by our principled approach to innovation, we’ll not only empower our partners to offer a dynamic mix of digital assets options, but also deliver differentiated and relevant consumer experiences.”

Consumers continue to seek out crypto assets as an option for everyday purchases. In the Bakkt U.S. Consumer Crypto Survey[1] of 2,000 U.S. Consumers, nearly half (48%) of respondents reported purchasing crypto in the first half of 2021, while 32% of those who didn’t are either very or somewhat interested in doing so before year-end. And, according to the Mastercard New Payments Index, 77% of millennials stated that they are interested in learning more about cryptocurrency, with 75% saying that they would use cryptocurrency if they understood it better.

“We’re incredibly excited to partner with Mastercard to bring crypto loyalty services to millions of consumers,” said Nancy Gordon, EVP, Loyalty Rewards & Payments at Bakkt. “As brands and merchants look to appeal to younger consumers and their transaction preferences, these new offerings represent a unique opportunity to satisfy increasing demand for crypto, payment and rewards flexibility.”

This partnership builds on both companies’ commitment to the crypto ecosystem. Bakkt publicly listed on the NYSE under the ticker BKKT on October 18, 2021, while Mastercard continues to invest in the digital asset space through several initiatives. This includes the acquisition of CipherTrace, partnerships with leading crypto players, the creation of new platforms to test and support central bank digital currencies, and more.