The Unbelievable Truth About Financial Crimes Compliance Reporting

While financial crimes compliance (FCC) has long been one of the central motivators for developing stronger data management practices, the intensity of regulations has increased over time, thereby elevating expectations for quality and speed in compliance reporting.

Meanwhile, perpetrators are not standing still. Rather, they are moving forward with new technologies to pursue their calling. In fact, fraud is initiated using artificial intelligence in many cases, and the problem is further exacerbated for large banks that operate internationally.

Additionally, despite a substantial amount of the work being done by IT departments, trust in the data within risk and compliance groups is remarkably low; only 2% of financial organizations express high satisfaction with their outcomes and confidence in data, according to benchmark surveys conducted by FIMA in partnership with Paxata in Q2 2017.

Due to these pressures, FCC reporting remains one of the top initiatives in the financial services sector, with 77% of organizations responding that more than a quarter of their analytics activities is driven by compliance.

Inasmuch as compliance reporting is highly dependent upon the availability and quality of data, one question remains: who within a financial organization is the most data–literate? That is, who is best qualified to actually act upon the data and transform it into information that can be confidently used for regulatory reporting?

While subject matter expertise is grounded in the line of business and inside risk and compliance groups, data expertise remains in IT. And one can’t do without the other.

Ultimately, success is dependent on how effectively these two groups communicate and collaborate around their data. And, believe it or not, today this is done via Excel.

Yes, Excel spreadsheets are the data exchange platform of choice between business teams and IT today. In fact, the FIMA study shows that 94% of financial organizations use spreadsheets for mission-critical compliance projects, with 48% using spreadsheets broadly and 46% on a limited basis.

How can the financial services industry – one that deals with transaction data in a greater volume and scope than any other industry in the world – still utilize spreadsheets for its most risk-intense projects, given Excel’s inherent limitations?

This was the topic of discussion in our most recent webinar. On July 19, Paxata partnered with FIMA to discuss how financial services organizations can course-correct and solve these problems on a grand scale.