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3 Ways to Help IT Improve Regulatory Risk Management and Compliance for Financial Services

John Trapani, Industry Leader, Financial Services, Appian
February 1, 2023

Managing a delivery team that supports any complex business requires aligning people and technology with the needs of your customers in order to deliver the software they need to run the business. Firms that operate within regulated environments like financial services, including capital markets also have to contend with external influence from regulatory partners—which can shape not only what you’re asked to do but also how you need to do it.

For large firms with an international presence this can mean integrating the demands of multiple regulators and supervisors with the day to day needs of your core internal customers. As an added challenge, regulations are always evolving, so there is a continuous stream of work being added to your backlogs.

Some regulations are very prescriptive and include a lot of very specific requirements that you need to implement. Others are more outcome-focused and describe a set of goals with few, if any, detailed mandates. For these your firm will come up with the policies and procedures that support the goals of the regulation. In both cases, as a development leader you’ll need to make sure your systems implement these policies.

Challenges for IT in regulatory compliance and risk management

There are two major challenges for IT in regulatory compliance and risk management:

  • Proving your systems and applications conform to the rules.
  • Keeping up with changing regulations.

Proving your systems are compliant.

The most common way  to prove regulatory compliance is to produce detailed audit reports that demonstrate who did what to which data, and when they did it. Regulatory exams, much like internal audits, will request specific samples of information that are in-scope for the subject and period.  For example, if an exam is focused on your KYC controls and activities they will ask for data on specific cases the team has worked on during the exam period. Producing a detailed audit trail that shows the entire history of the case will demonstrate to the examiner or auditor that all of the controls your firm has implemented have in fact been followed. Being able to easily capture and produce this detail is very helpful.

Another way to demonstrate compliance is to be able to easily walk someone through your application code so they can verify that it behaves the way it's supposed to. For many applications this is practically impossible, since they’re only understandable by experienced software developers. This type of review is useful not only for examinations, which typically care about the audit trail showing what has happened, but also for your quality assurance processes. When making any change to your applications, and especially changes that support regulatory compliance, having the ability to develop a shared understanding with your subject matter experts and testers is a great way to validate that what is built will behave as expected.

Fast pace of regulatory change.

Development teams always try to focus on delivering the highest value items from a large and dynamic backlog. Ideally, the backlog items are driven by your business partners and represent opportunities for growth and increased efficiency.

But anyone who has worked in a regulated environment knows that regulations constantly evolve. For IT, that means many of the items in your backlog come from regulatory and compliance needs. Imagine an investment advisor with a global presence, offering products and services in multiple markets around the world. Such a firm will have multiple regulatory and supervisory partners, each a potential source of change. Your backlog becomes crowded with items that are not focused on driving business growth or improving efficiency, and it becomes more difficult to deliver business value to your stakeholders.

Read how a leading international bank uses Appian to keep up with regulatory change.

3 ways the Appian low-code automation platform simplifies compliance and audits:

1. Easily capture and report audit information.

For the purpose of proving compliance, applications built on Appian make it simple to capture the kind of detailed audit information that your compliance and regulatory exams require. With Appian you can record the history of your workflows and your data, and produce reports that aid in examinations.

What’s more, since Appian uses visual tools to build applications, it’s easy to walk your audit or compliance team through the process flows, data, and rules that make up your applications. So you can simplify both the quality assurance process as well as the examination process by using Appian.

2. Apply automated conformance checking.

Appian’s process mining tool allows you to introspect a business process and uncover blockers, inefficiencies, and ad hoc behaviors that play out in the real world. Its conformance checking capability compares how your applications are being used by your users against an ideal baseline that you define. You’ll then receive alerts when the actual work is being conducted in ways that may violate your regulatory responsibilities. This is an invaluable tool to maintain operational compliance, especially for rules involving topics like the timing of notifications or the review and approval of certain actions.

3. Develop applications in a fraction of the time.

Appian alleviates the burden of regulatory change because using Appian it’s at least 10 times faster to build and maintain applications. You’ll not only spend a fraction of the time delivering the first version, but you’re also giving yourself a lifetime discount on maintenance. Whenever you need to make a change to your application, no matter the reason, you will be spending far less time doing so. This means that your team can deliver more stories in less time, and make choosing where to focus less of a problem.

Appian is the fastest way to build and maintain complex applications. Standardizing on Appian as the platform for your workflow, case management, and process automation needs is the best way to not only solve for regulatory compliance, but also to deliver great applications faster than ever before.

Read this eBook to learn more about how process automation reduces risk management in the financial services industry.