ComplySci’s CEO Details How to Advance from the Initial Decision to Add Compliance Technology to a Fully Implemented System
For companies endeavoring to lower costs in competitive times, the day often comes when leadership recognizes that continuing to tighten the budgetary belt will cost the firm more in work hours and resources than biting the bullet to embrace improvements.
In the rapidly evolving wealth management compliance landscape, that day of recognition comes frequently, as increased regulation and compliance requirements and new arbitration and lawsuit award trends add pressure to compliance officers to monitor transactions more frequently, send higher volumes of more tailored information to clients, vet potential clients thoroughly but painlessly at onboarding and create and store increasing amounts of records.
Fortunately for our industry, technological evolution has maintained pace with compliance pressures, so that often the right answer to new compliance problems is adding technology. But that answer constitutes only a preliminary step in a bewildering process of determining needs, budgeting, selecting partners and implementation.
For many firms, especially smaller advisory firms, the steps and questions can overwhelm the decision makers. To organize this process, we spent time with Amy Kadomatsu, CEO of regtech service provider ComplySci, who provided some easy-to-grasp steps that will take a firm from making the initial decision to increase regtech through to a successful implementation.
WSR: Before reaching out to a regtech provider, what are the basic steps and thought processes for a company to decide what it needs in terms of improved technology and automation?
Kadomatsu: Firms should first ask some basic questions to set a sensible direction. Do they already have a technology-based system in place or are they moving from a completely manual compliance system? Is their current system outdated, whether as a whole or in specific elements that they would like to improve? Lastly, what are the main causes of frustration or friction that are driving them to look for new technology solutions?
The firm should also decide which features and capabilities are necessities versus nice-to-have and determine their budget, including any ongoing maintenance costs, and they should balance these aspects against the cost savings in time and accuracy of new technology.
Once established, the company should determine whether to work with an external partner or expend time and internal resources to build or upgrade the system in house.
WSR: Once a company knows what it needs, how does it select the right partner to fill those needs?
Kadomatsu: To select the right technology partner, a firm should evaluate several key elements including expertise, ability to customize, ongoing customer support and how often the company enhances or adds to its offering.
Industry expertise. Does the provider have expertise in wealth management? Does its experience and client base match closely with the firm’s needs? You don’t want to discover a partner doesn’t understand your business after the fact.
Customizable technology. Can you customize the technology to not only meet your current needs, but also future developments? This is the perfect time to consider your five-year growth plan and if the firm is going in a direction that will still match the partner’s expertise down the road.
Support. Does the potential partner have a reputation for good after-sales support and service? The less technology resources you have in house, the more important this question becomes.
Innovation. Is the potential provider an innovator who actively strives to stay on top of the latest product developments, adapting to market needs and evolving legal and regulatory landscapes?
WSR: Assuming the partner installs new technology according to the company’s needs, what does the company do next?
Kadomatsu: A firm’s regtech provider should focus on the technical aspects, but it needs the firm’s help to manage the human element and actually take advantage of the technology. To do this, you should:
Find an evangelist. Designate an evangelist for the new technology within each department who uses it and train the evangelist before training the rest of the team so this person can serve as the first resource for questions or concerns. The evangelist will also be helpful in giving feedback for improvements later.
State the why clearly. Employees adapt to new systems more easily when they understand why a change is being implemented and how those changes benefit the company, stakeholders and especially the employees in their day-to-day work.
Conduct frequent training. You should train all employees who will use the new technology and continuously renew that training, rather than slipping into a passive mode of training new employees only.
Manage glitches and errors. Human errors and integration glitches often occur no matter how skilled the technology provider may be. The firm should ensure its chief compliance officer, leaders and product evangelists follow up with employees and the provider to proactively manage errors and glitches.
Michael Madden, Contributing Editor & Research Analyst at Wealth Solutions Report, can be reached at mmadden@wealthsolutionsreport.com
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