Roundtable Takeaways: The Role of Networks in the New Era of Insurance

Just like their retail peers, commercial banking customers have an expectation for robust, frictionless, customer-centric experiences that are omni and opti-channel. But, in the current environment, they also value the importance of human interaction. Commercial customers desire a trusted advisor as highly as they demand a slick digital experience. They want relationship managers to understand and respond to their unique needs, preferences, and risk profile at every stage of the customer lifecycle.

Over three-quarters of SMEs (78%) agree that digital transformation of banking needs to be balanced with a human element. But almost six in ten SMEs (58%) believe that whilst digital transformation of banking has resulted in cost savings for the banks themselves, the customer experience has suffered as a result.

Banks must evolve their business model to meet new societal expectations and engage customers in highly dynamic environments.

So, how to differentiate?

Is digitisation transformation enough?

No, banks should not forget about the personal touch.

The challenge of course, is how to deliver the personal touch at scale, whilst simultaneously having a firm grasp on everything digital and delivering sophisticated, automated processes and always-on solutions.

As our Banking Success Director Lucy Huntley eloquently puts it: “A great personal experience certainly has technology at its heart. Banks need to harness technologies like artificial intelligence and machine learning for better decisioning and delivering a personalised experience.”

What does a hybrid solution look like?

Our new report, in association with FinTech Futures, unpacks:

• What the ideal hybrid solution looks like
• How to balance technology and human in practice
• What banks need technology to do
• What technologies need to be involved at each stage of the customer lifecycle experience
• Examples of good technology in practice

Banks can blend digital and human for superior customer experiences. Download our free report now to find out how.

‍

‍

For Relationship Managers (RMs), the use of CRM technology in banking has become a hot button issue. More and more customer success teams are investigating whether adopting customer relationship management technology can optimise the customer experience, especially in an increasingly digital environment.

The global pandemic has accelerated a decade-long trend towards less human involvement in banking and more reliance on technology - as face-to-face visits with banking professionals are increasingly replaced by online services, chatbots and apps. While this has led to some improvements for customers - such as speedier transactions and 24/7 access - 78% of SMEs agreed that the digital transformation of banking needs to be balanced with a human touch.

It’s all about creating a blended, hybrid approach. One that balances the ease and accessibility of digitisation with the relational benefits of human interaction. An approach that puts customer experience at the centre of everything.

This is an approach that CRM technology can support.

What is a hybrid approach?

While digitisation has provided huge benefits to banks and customers alike, one area has suffered in the race to replace the bank on the high street with the app in your pocket. Customer experience. A staggering 58% of SMEs believe that the digital transformation of banking has caused a drop-off in the quality of service they receive as customers.

A hybrid approach combines digitisation with a human element to offset the challenges of each approach while strengthening the positives.

Better technology lets you leverage data at the most important stages of the customer journey - discovering exactly when customers want automation to streamline the process, and where they’d like genuine human interaction.

This is especially important for high value or complex deals where a reputation manager needs to get a hands-on feel for how a new customer’s business works, and for any unique requirements that will need to be handled.

By blending the smoother onboarding and risk reduction of digital banking with genuine human connection, you can offer the best of both worlds.

Can adopting CRM technology really put the human element back into banking?

The main issue most customers have with digital banking is a feeling that they’re on a computerised conveyor belt. Things happen because computers say so, and there’s no opportunity to stop or to change direction.

Customers want to feel valued, and the banking industry needs to support them with a real human connection. The use of CRM technology supports that human touch, identifying critical stages where a personal call, email or meeting will provide that real feeling of value for the customer.

And because this human element is backed by the benefits of automation, banks can use customer relationship management systems to stand out from the competition with frictionless onboarding journeys.

It’s not just about putting people back into the process. It’s about supporting those people to make life easier for customers at every stage of the journey.

How should RMs use CRM technology to optimise customer experience?

As we found in our report, written in collaboration with FinTech Futures, RMs are making more and more use of CRM technology. RMs now have more work than ever before, often dealing with huge numbers of clients, all of whom expect a more personal service.

The use of CRM tech to track these customers and provide RMs with in-depth information allows for a much deeper personal connection. It’s no longer on an individual RM to remember facts and figures or find time to set meetings and arrange calls - instead, the CRM system collects and leverages customer data to aid RMs.

Instead of digitisation placing customers on a conveyor belt, adopting customer relationship management technology allows banks and RMs to form deeper, more meaningful customer relationships and provide a better, streamlined customer experience.

Adopting customer relationship management technology with FullCircl

FullCircl can help you to adopt a true hybrid approach, providing your customers with the very best of digital and personal banking services. By correctly interpreting and leveraging data, we’ll empower you to make the best use of your expertise and offer a much better customer experience to your key clients.

Download your free copy of the report here.

Alternatively if you have any questions about adopting CRM technology or the services FullCircl can provide, email letstalk@fullcircl.com.

In 2023, regulated businesses are navigating a highly dynamic regulatory landscape. With financial crime and AML failures a key area of focus for FCA enforcement action, a high-functioning due diligence framework has never been more vital to ensuring compliance, whilst supporting growth, innovation and improving the customer experience.

Let’s start with the basics…

What is Customer Due Diligence?

Customer Due Diligence (CDD) is the process of identifying your customers, checking they are exactly who they say they are, and ensuring they are properly risk-assessed before being onboarded. CDD sits at the heart of Anti-Money Laundering (AML) and Know Your Customer (KYC) initiatives.

What does Customer Due Diligence look like in practice?

AML requirements in the UK are based on several key Acts including The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, The Financial Services and Markets Act 2000 (FSMA) and the Proceeds of Crime Act 2002.

In simple terms financial institutions must carry out CDD measures when establishing a new business relationship, undertaking occasional transactions, when it suspects nefarious activity or when it doubts the accuracy or adequacy of customer information. When carrying out CDD measures a regulated business must:

• Verify the customer’s identity
• Identify and verify beneficial ownerships (for business entities)
• Understand the ownership and control structures of a legal person, trust, company, foundation, or other entity
• Assess and obtain information pursuant to the purpose and nature of the business relationship or transaction

The complexity of financial crime remains a huge challenge for businesses. Combined with rapidly evolving geo-political events and sanctions, regulated businesses are increasingly taking a risk-based approach to customer due diligence, moving beyond standard CDD to enhance customer identity assurance.

What is Enhanced Due Diligence?

Enhanced Due Diligence (EDD) is an extension of CDD. EDD is a set of measures applied, using a risk-based approach, to investigate potentially high-risk customers or transactions and gather more evidence and detailed intelligence.

High-risk customers might include, for example, those subject to economic sanctions or operating in countries without adequate AML controls, customers with complex ultimate beneficial ownership (UBO) structures, companies managed by politically exposed persons (PEPs), or businesses operating in countries with significant levels of corruption, criminal activity or terrorist activity.

EDD provides a greater level of scrutiny of potential business partnerships and highlights risk that cannot be detected by standard customer due diligence checks. EDD measures may include adverse media screening, obtaining additional identifying information, analysing the source of funds, scrutinising Ultimate Beneficial Ownership (UBO) and transaction screening.

What is the difference between CDD and EDD?

Essentially, CDD and enhanced due diligence are different levels of background checks. The key difference between CDD and EDD arises as a result of a customer risk assessment. If through a risk-based approach to assessment a customer is deemed to present a normal level of risk, they can go through CDD, however if it’s apparent that they present a higher level of risk, they are required to undergo EDD.

But - and it’s an important but - CDD doesn’t end at the customer verification and onboarding stage.

What is Continuous Due Diligence?

Customer behaviour changes and risk profiles evolve. Continuous due diligence, also referred to as Ongoing Customer Due Diligence (OCDD) or Perpetual Due Diligence (PDD), refers to a risk-based in-life monitoring approach, based upon risk events and triggers and identifying risk patterns, for maintaining KYC/KYB information and monitoring customers for the risks they pose for money laundering and other financial crimes.

EY recently described continuous due diligence as a transformative strategy, beneficial, less burdensome, and less costly for regulated business and their customers. They also stipulated that transformation requires investment in technology and data, including trusted data sources, integrated triggering events, data logic, adverse media screening, and automated updating of customer information.

Ready to go beyond standard due diligence?

Customer Lifecycle Intelligence (CLI) from FullCircl goes way beyond standard due diligence, through the use of automated data collection and execution of critical checks and processes to deliver continuous due diligence. The result being regulated businesses can ensure compliance through proactive risk mitigation – targeting efforts where it is needed in line with their policies and risk appetite.

The ultimate risk-based approach, CLI utilises technology to connect data points that can be used to expose potential risk trends and connections across networks of people and businesses, as well as providing the ability to overlay policy decisioning and risk appetite across trigger changes – generating targeted and actionable events, prioritising remediation to the highest risk activity and delivering consistency of decisioning and efficiency benefits in AML and KYC.

Head over to our Resources Hub for more information about our web app, API, decision engine, and due diligence tools, including specific guidance on UBOs, PEPs and sanctions, adverse director history, CCJs and legal notices.

Get in touch to find out how we can supercharge customer onboarding and due diligence - so you can do Better Business, Faster

In February 2023, the British government marked the one-year anniversary of the invasion of Ukraine by issuing further sanctions against Russia.

Doubling down on efforts to cripple the Russian economy, and Putin’s ability to wage war on Ukraine, the Foreign Secretary announced a package of sanctions including export bans on every item Russia has used on the battlefield, import bans of iron and steel goods, 1,500 additional FCDO targets, and 92 individuals and entities (including 4 banks).

Indeed, the UK sanctions list now covers more than 1,551 of Russian’s most significant and high-value individuals and 180 corporate entities and subsidiaries, effectively shutting out huge sectors of the Russian Economy from international markets.

Complex, volatile, and rapidly evolving, the current global sanctions landscape, with its vast range of country-specific regulations, is a huge compliance challenge for financial institutions (FIs). In total, the latest sanctions list update covers 3,788 individuals and entities from 23 countries, plus specific sanctions lists covering ISIS and Al Qaeda, chemical weapons, counter terrorism, cyber, anti-corruption and human rights.

A complex geopolitical landscape

FIs are required to ensure that the individuals, entities, and subsidiaries they do business with are not subject to sanctions. However, achieving compliance and staying compliant is an incredibly complex process. Increasing regulatory scrutiny, as well as the inconsistent nature of global regimes, is putting intense pressure on FIs to raise the bar for sanctions compliance and awareness.

As part of customer due diligence, including know-your-customer (KYC) and know-your-business (KYB) checks, FIs need to be able to scrutinise their customer base to:

• Offer support to Ukrainian businesses or companies with Ukrainian links
• Improve awareness of companies with links to sanctioned countries, organisations, and individuals
• Identify Ultimate Beneficial Owners (UBOs) from sanctioned countries and organisations
• React quickly to regulatory change.

FullCircl has a number of tools to help

Take a look at our Russia-Ukraine guidance note covering:

• Company reports
• Company ownership and UBOs – including our UBO API endpoint
• Watchlists and watchlist filters.

In addition, we also provide:

• Adverse Director History Premium Data Extension
• HMRC Imports and Exports Premium Data Extension
• International Premium Data Extension
• CCJ and legal Notices Premium data Extension

If you thought the FCA would back off following a raft of heavy fines imposed for breaches relating to anti-money laundering (AML) systems and controls in 2022 - think again.

Doubling down on efforts to reduce and prevent financial crime, the regulator has started 2023 the way it means to go on by issuing several multi-million pound enforcement actions in the first few weeks of the new year.

FCA principle 3 – Management & Control

The enforcements taken so far this year centre on failures under Principle 3 of its handbook – Management & Control. This requires that banks and financial service providers take reasonable care to organise and control their affairs responsibly and effectively, with adequate risk management systems.

It’s worth noting the FCA doesn’t require an incident of money laundering to have actually occurred in order to take enforcement action under Principle 3. The requirement is simply that management and control failures have the potential for money laundering risk.

Let’s take a look at four common failings, and examples of best practice responses from the financial service industry…

Best Practice AML Risk Management Systems

1. Insufficient Onboarding intelligence

The FCA requires firms to apply appropriate Know Your Customer (KYC), customer due diligence (CDD) and enhanced due diligence (EDD) measures when establishing new commercial relationships. KYC is the backbone of a robust AML control framework. Shortcomings in KYC, CDD and EDD at onboarding stage negatively impact the robustness of risk management controls throughout the customer lifecycle.

Santander is shining example of a bank that has fully committed to plugging the highly publicised gaps in its AML controls at onboarding stage, to ensure they meet the FCAs high standards for compliance and risk management. Santander created a fully digital onboarding process that streamlines the customer experience, whilst ensuring all necessary KYC, CDD and EDD checks are performed by surfacing connected intelligence from billions of validated and verified third party data sources.

Not only does this mean Santander complies with Principle 3, but they also meet demanding CX expectations. Santander has successfully reduced time to onboard 75% of complex customers from the previous 14-21 days, to just five days.

2. Inadequate continuous monitoring

Unfortunately, there is still a strong reliance on periodic reviews and manual approaches across the financial services industry, leaving banks and financial institutions at risk of failing to meet FCA expectations regarding ongoing monitoring – whether that be of customers or the supply chain.

Schroders Personal Wealth (SPW) offer a fantastic example of industry recognised continuous in-life monitoring approach.

If an FSI lacks complete real-time transparency and visibility over its entire supply chain ecosystem, then unidentified material changes can breach regulatory and legal compliance.

SPW harnesses a multitude of official and third-party sources to provide a real-time, accurate and contextualised view about any supply chain organisation, large or small. SPW monitors 366 3rd, 4th, and 5th party suppliers daily, 160 of which support its critical business process. Layered over this rich real-time business intelligence SPW harnesses a rules engine customised to the unique visibility needs of its supply chain. Using 28 bespoke rules it automatically spots specific risk triggers - including non-compliance with regulations, increased debtor days, directorship changes, UBOs, insolvencies, changes in credit score, Delphi score reductions, and potentially high-risk countries and/or industries – to always achieve a mission control view over its entire supply chain ecosystem.

3. Lack of prompt action

A common failure is the inability to spot and act on red flags immediately. To ensure compliance with Principle 3, banks and FSIs need their compliance teams to be automatically notified of changes to clients’ credit scores, adverse media, CCJs, Gazette notices, adverse director history, PEPs and sanctions lists and more. This ensures they are not only protected from exposure to unnecessary AML risks, but that they can remediate risks quickly and efficiently.

Metro Bank has taken a revolutionary tech-driven approach to bringing compliance and KYC into the forefront of its business and commercial banking activities. Abandoning analogue processes in favour of a data-driven approach, Metro Bank knows more, knows sooner, and saves valuable time in the process - finding 14% more critical risk issues and reducing the average case time from 200 minutes to 8 minutes (a 94% improvement).

4. Failure to align process to policies

To be fully compliant with FCA rules and money laundering regulations, a bank's or FSI’s processes also need to match their policies.  

In response, many banks and FSI’s have integrated a rules-based decision engine to automate KYC and AML checks and achieve complete customised control of their compliance with Principle 3. One such institution is Metro Bank, who have implemented policies with a decision engine for faster, automated KYC, AML, and credit checks.

Metro Bank combines everything it knows about its customers, business, and market, and leverages an advanced decision engine that ingests millions of structured and unstructured data points to layer on top of that know-how. This approach quickly delivers the impactful insights and risk intelligence needed for next-generation prospecting, customer monitoring and engagement, advanced onboarding, and ongoing assessment of portfolio risks and opportunities.

By aggregating data from a multitude of different sources and mapping that intelligence to its risk appetite-based rules framework it can flag issues immediately and deliver an onboarding process that is 94% faster than previously achieved.

Don’t risk finding yourself in the glare of the FCA’s spotlight

The FCA has made it clear - there is simply no excuse for a failure to comply with money laundering rules and regulations. If you’re interested in learning how FullCircl can deliver complete confidence in your KYB and AML risk management systems, please get in touch.

The pandemic certainly accelerated digital transformation in the insurance sector. For an industry that had long been perceived as lagging behind its financial service peers, insurance businesses demonstrated remarkable agility, flexibility, and resilience in overcoming a host of obstacles. But in 2023 the challenges continue to mount.

There’s a need to refocus once again in the face of tough economic and geo-political circumstances, and a persistent urgency remains to reinvigorate the customer experience in line with evolving post-pandemic expectations, especially in the traditionally underserved SME sector.

Vast changes are still needed. But the window to make them is shrinking, and the need to accelerate next-generation digitisation is greater than ever.

What does the future of insurance look like?

To answer that question, we asked the people helping to shape it.

For our latest whitepaper we spoke to experts from across the insurance industry to understand the key challenges insurers, brokers and MGA’s are facing. With insights from commentators from both the Lloyds and company markets, as well as the fintech/insurtech community, our report sets out:

• The current state of play
• The need for innovation and the appetite for change
• Why embracing new technology is vital
  
• What insurtech 2.0 really looks like

To find out how to use data and technology to build a more customer-centric insurance future, download your free copy now.