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MANUAL PAPERWORK AND INEFFICIENT PROCESSES ARE HINDERING FINANCIAL SERVICES

FINANCIAL SERVICES

Author: Matt Tuson, SVP & MD EMEA, Conga

 

In the finance industry, it is all about the customer. However, it is difficult to cultivate and nurture client relationships – such as between a broker and customer, an insurance agent and enterprise account, or a bank and its account holder – with mountains of manual documentation and slow, inefficient processes.

In addition, regulatory issues are constantly evolving in finance – becoming more complex and more rigorous – while competitive market forces and pressure from fintech firms continue to grow, as do requirements for cybersecurity and consumer data protection. With the right tools, financial services companies can create an intelligent, connected experience across all of their documents and contracts.

 

Putting the business at risk

Contracts are the coin of the realm, defining relationships and interactions between businesses, regardless of business type or size. In the financial services industry, the number of contracts governing business-to-business interactions are proliferating – including loans, new account openings, etc. Indeed, the average business maintains 20,000 to 40,000 contracts.[1] However, if they are not well-administered, they introduce an area of significant potential risk and loss.

FINANCIAL SERVICES

Matt Tuson

Many companies have not taken steps to update and optimise their contract management processes. In fact, fewer than 10 percent of organisations have implemented digital systems to streamline contract management. This is often the case for financial services firms and this can not only leave them out of touch with today’s digital world, but far behind their nearest competitors.

Like many business processes, relying on paper-filled filing cabinets or rudimentary online systems to house contracts is inefficient and creates significant risk. In fact, a significant percentage of all contracts are actually lost, essentially ensuring that terms and conditions will not be monitored and carried out.

For legal and procurement, in particular, non-compliance and performance violations are the essence of significant risk. Companies spend 60 percent of their revenue on external supply, while few have invested in systems to oversee a large variety of independent contracts and relationships. It comes as little surprise that this is still a major issue in the financial arena.

Ensuring compliance and protecting company and customer data has never been more important. With regulations, including the UK Companies (Audit, Investigations and Community Enterprise) Act 2004 and the EU General Data Protection Regulation (GDPR), financial institutions must maintain a close watch on the entire lifecycle of its services.

 

Eliminating manual processes

Financial services professionals need intelligent automation solutions to address these difficulties, such as a contract management solution. This can help eliminate time-consuming, manual processes and enable financial service professionals to complete financial forms, contracts and documents in record time and with fewer areas, whilst ensuring compliance.

Efficiency and productivity

Only by adopting automation technologies as part of a carefully planned, wider-digital transformation initiative, can businesses ensure efficiency and truly mitigate risk. Moving contracts to a state-of-the-art, automated interface leads to better standardisation and consistency, while cutting contract creation time in half.

Integrated workflows, alerts and notifications, and templates further reduce administrative load and significantly shorten contract cycles, reducing the contract negotiation cycle by up to 50 percent, and overall contract cycles by as much as 60 percent. By adding an electronic signature feature to its contract solution, a company can cut down its contract cycle from a 3.4-week average to five days or even less.

In fact, the Law Commission recently ruled that electronic signatures can now be used as a viable alternative to handwritten ones[2]. Electronic signatures are now capable in law of executing a document, including trust deeds, providing that the person signing the document intends to authenticate the document and any formalities relating to execution of the document are satisfied.

Increased visibility and control

With the conversion to a single, searchable, electronic contract repository, financial services companies will gain visibility and control into all contracts. This means that the diverse information within each contract can be viewed at any time, enabling financial services professionals to search for and act upon information quickly.

For more complex contract scenarios, such as for procurement or legal teams, businesses can spot and leverage connections that might not have been visible before, such as multiple, separate contracts with the same party. Another key feature is the ability to view and manage contract families, so that you can navigate all related contracts and understand their relationships within the contract’s hierarchy, as well as access all related documents, in one spot. This can be hugely valuable in financial services firms.

Additionally, deep visibility into the contract cycle creates the ability to uncover underperforming contracts, and it opens up a broader view to help you understand if there are slow-downs or pain points resulting from certain contract types, stages, or parties. Businesses can even find contracts based on conditions that create risk, parsing your view by regulatory requirements, products, location, or other features.

Mitigating compliance risk

Financial services can protect sensitive client and institutional data, while complying with the latest laws and industry regulations. A contract management solution will not only flag potential compliance red flags including audit issues, but it also helps ensure compliance through automated document retention.

Depending on the type of document, there are strict policies in financial services as to the length of time that documents need to be retained. An easily configurable contract management solution can automate document retention procedures to guarantee compliance in accordance with a company’s unique scenario.

 

Empowering financial service professionals

Ultimately, failing to act now and address holes in the contract management process within a financial services firm will lead to greater losses and higher risk in the future. With intelligent automation solutions, such as contract management technology, financial services professionals will benefit from greater efficiency, productivity and visibility, as well as effective compliance, and control.

[1] http://cmsd.nl/wp-content/uploads/2015/10/memba_pwc_contractmgmt.pdf

[2] https://www.lawcom.gov.uk/project/electronic-execution-of-documents/

Business

STOP THE CONFUSION: HOW TO KNOW IF YOUR BUSINESS MAY BE INSURED AGAINST COVID-19

COVID-19

By Alex Balcombe, Partner at Harris Balcombe

 

The last few weeks has seen businesses in hospitality, tourism, retail, leisure and more forced to close their doors following the Government’s orders that they should close to prevent the spread of coronavirus.

While this is expected to flatten the curve and reduce the number of coronavirus cases, it will of course have an impact on businesses and employees alike.  For small businesses especially, there are many concerns about how they can claim on their insurance to weigh the fall of this impact.

 

Mixed Messaging

In response to calls to help struggling businesses, the Government has informed the public that companies who are facing turmoil will be able to claim on their business interruption insurance during this difficult time. For most, this is wrong.

Alex Balcombe

The insurance industry has also been extremely vocal that there is no cover for any coronavirus-hit businesses during this tough financial period. This isn’t strictly true either.

How can businesses see through the mixed messaging and best secure their future and their livelihoods and reduce money worries? It’s an extremely stressful time for many companies, and confusion over whether or not they can be covered can only cause more unnecessary stress.

Since it’s a new disease, most businesses will not be covered for business interruption due to COVID-19. In fact, the vast majority of policies do not cover anything related to COVID-19.

That said –  don’t rule out the idea that you may be covered. There is a chance that you will be covered against COVID-19, but not know it. This is a very small chance, but your current cover may already protect your business against the consequences of coronavirus, and the nationwide response to it –  though those with this cover are unlikely to realise it.

 

How Could I Be Covered?

Not everyone has business interruption insurance, as it’s not a legal requirement. It is entirely up to the policy holder to weigh up the benefits of having it, and their ability to trade should a disaster happen.

To be considered for cover for COVID-19, there are two types of policy extensions to your business interruption cover that can potentially cover you for this situation:

Infectious Disease Extension 

Many policies expressly state which diseases fall within the realm of being an infectious or notifiable disease. If this is the case, your policy will not provide cover. As it is a new disease, these policies will not have included COVID-19.

Other infectious disease extension policies will define the disease with reference to the actions of the government. Since the UK Government has named COVID-19 as a notifiable disease throughout the UK, it is possible that your business may fall into this definition, thus meaning you may be able to make a claim.

However, again, it’s not always that simple. Many policies require the disease to have been on your premises, while others specify a radius from your premises in order to qualify.

 

Denial of Access Extension (non-damage)

Denial of Access Extension (non-damage) policies may cover you if you’re prevented from accessing your property. This could be due to an event, or by the actions of a competent authority, which could cause your business interruption cover to engage.

If covered by this clause, there are often very subtle differences in wording in your policy. This could depend on the insurer or policy. You may well be covered, but it will depend on your particular circumstances, and the specific policy wording.

 

What now?

It’s clear that the Government needs to do more in ensuring there is clear messaging for businesses, and to help the insurance market look after policy holders. This is an unprecedented situation, and with many people looking to claim on their insurance, we’re already seeing major delays which could have a domino impact.

People throughout the world are understandably facing all kinds of worries because of the current pandemic. Our ways of living have changed, and many business owners will not have experienced a situation like this in their life times. If you own a business and are unsure about whether you can claim for business interruption, or are confused about ambiguous wording, get in touch with a loss assessor.

These claims are not simple, but loss assessors will be experts in business interruption insurance, and will specialise in large and complex claims. They will be able to help and guide you along the way, check your wording and work on your behalf to make sure you get everything you are entitled to.

 

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Business

HARNESSING ANALYTICS IN THE FIGHT AGAINST FRAUD

ANALYTICS

By Anna Lykourina, EMEA Fraud Analytics Expert at SAS

 

In the past, the fight against fraud has been a bit hit-and-miss. It has relied on auditors to identify patterns of behaviour that just didn’t quite fit. They often only detected problems months after the event. And then organisations had to claw back stolen funds through legal processes.

In a world where transactions happen in under a second, however, this is no longer acceptable. We need to be able to detect fraud immediately, if not before it happens. Customers want safe and protected data that is not vulnerable to identity theft through company systems. But they still want to be able to pay online and in seconds. The stakes are high, but fortunately new tools and techniques in fraud analytics are enabling companies to stay ahead of fraud.

 

Trusting machines to do the work

Machines are much better than humans at processing large data sets. They are able to examine large numbers of transactions and recognise thousands of fraud patterns instead of the few captured by creating rules. On the other hand, fraudsters have become adept at finding loopholes. Whatever rules you set, it is likely that they will be able to get ahead of them. But what if your system was able to think for itself, at least to a certain extent?

New approaches to fraud prevention combine rules-based systems with machine learning and artificial intelligence-based fraud detection systems. These hybrid systems are able to detect and recognise thousands of fraud patterns and learn from the data. Automated analytical-based fraud detection systems can reveal novel fraud patterns and identify organised crime more consistently, efficiently and quickly. This makes them a good investment for businesses across a wide range of sectors, including public sector, insurance, banking, and even healthcare or telecommunications.

How, though, can you harness analytics as a tool in your fight against fraud?

 

Identifying needs and solutions

The first step is to identify which options you need. Probably the best way to do this is through a series of company-wide workshops with the fraud analytics experts to determine what analytics you need, which data to include and techniques to use, and what results to report. They can also identify the ideal combination of rules-based and AI/ML approaches to detect fraud as early as possible.

Companies looking towards advanced analytics for fraud detection will need to make a number of decisions. They will need to optimise existing scenario threshold tuning, explore big data, develop and interpret machine learning models for fraud, discover relevant information in text data, and prioritise and auto-route alerts. There may be industry-specific decisions to make, too, such as automating damage analysis through image recognition in the insurance sector. By automating these areas, companies can both significantly reduce human effort – reducing costs – and improve their fraud detection and prevention.

 

Benefits of an analytical approach to fraud detection and prevention

Companies that are already using an analytical approach for fraud prevention have reported several important benefits. First, the quality of referrals for further investigation is better. Investigators also have a much clearer idea of why the referral has been made, which improves the efficiency of investigation. Analytics also improves investigation efficiency by reducing the number of both false positives (that is, alerts that turn out not to be fraud) and false negatives (failure to spot actual frauds). This improves customer experience and reduces risk to the company.

Analytics makes it possible to uncover complex or organised fraud that rules-based systems would miss. Companies can group together customers and accounts with similar behaviors, and then set risk-based thresholds appropriate for each scenario.

There are several sector-specific benefits too. For example, insurance firms can identify fraudulent claims faster to prevent improper payments from going out. Claims investigation is likely to be more consistent because claims are scored through technology, algorithms and analytics, rather than by people. Finally, it becomes possible to shorten the claims process through automated damage analysis. It is no wonder that organizations across a wide range of sectors are placing analytics at the heart of their anti-fraud strategy.

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