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Between KYC and Stimulus Lending, Banks Are Caught Between a Rock and a Hard Place

Herbert Schild, Industry Lead, Financial Services
April 21, 2021

But low-code automation can help. Amid the pandemic, banks are under enormous pressure to comply with stricter regulations and keep up with growing demand for new lines of credit. Here’s Appian Financial Services Industry Lead in Europe, Herbert Schild, on how low-code automation can help at a critical time.

What are the challenges with issuing rapid stimulus loans?

During the pandemic, businesses around the world faced the threat of closing their doors, amid declining sales and self-isolating employees. That prompted many governments to introduce stimulus lending programs to help businesses stay afloat, and in a bid to kickstart economic recovery.

Banks were left scrambling to adapt their workflows to offer new forms of credit, at breakneck speed. Existing problems – like uniting data between multiple legacy systems – were only exacerbated by taking new loan products to market so quickly.

What about Know Your Customer (KYC) – and are there parallels?

Long before the pandemic began, the banking sector was grappling with ever-increasingly regulatory changes, partly triggered by the role some institutions have played in tax evasion and money laundering. Regulators reacted by imposing stricter requirements on how financial institutions maintain their customers and audit risk internally, known as Know Your Customer (KYC).

KYC places a mandatory burden on financial institutions to account for the identity and veracity of customers. The fact that many banks operate across borders adds a layer of complexity, as there are no globally uniform risk analysis guidelines. Building complexity on complexity, the required due diligence data is often not held centrally, meaning significant manual work is necessary to coordinate KYC investigations. The result is a multitude of - you guessed it - complex, time-consuming processes that pose major challenges and can cause crippling delays for financial institutions.

What technology can banks implement to help keep pace with change?

Low-code automation is the ideal bridge between global information management and centralized case management, as well as orchestrating between internal and external-facing systems. That’s important for faster, more flexible and integrated KYC-AML processes. Even better, using a low-code automation platform supports onboarding compliance by enabling process conformity, speed, and a more customer-oriented experience. In addition, tools such as stress test management, horizon scanning, AML, service provider oversight and control, as well as data protection, including GDPR and CCPA, can help control the development, use and scaling of governance, risk and compliance related initiatives.

By simplifying and automating loan processes, low-code can accelerate the time from loan application to disbursement, which could be a lifeline to businesses. Low-code automation technology allows financial institutions to create applications quickly and integrate them seamlessly into existing systems.

If a new lending scheme, regulatory or loan criteria change comes in, applications can be flexibly adapted at any time and at pace. Applications developed on a low-code automation platform can be deployed immediately and used across devices. Whether in the cloud, on-premise or as a hybrid, a low-code automation platform should comply with the highest security standards.

This allows bankers and mortgage advisors to work on a loan at any time and from any location with data privacy and information security. The pandemic and lockdown have changed work culture as we know it. Enabling employees to work from home with sensitive data in a secure, flexible way has never been more important.

Hear more from Herbert by watching a webinar replay on Stimulus Lending or access our in-depth resources on KYC.