No Result
View All Result
SUBSCRIBE | NO FEES, NO PAYWALLS
MANAGE MY SUBSCRIPTION
NEWSLETTER
Corporate Compliance Insights
  • Home
  • About
    • About CCI
    • CCI Magazine
    • Writing for CCI
    • Career Connection
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Library
    • Download Whitepapers & Reports
    • Download eBooks
    • New: Living Your Best Compliance Life by Mary Shirley
    • New: Ethics and Compliance for Humans by Adam Balfour
    • 2021: Raise Your Game, Not Your Voice by Lentini-Walker & Tschida
    • CCI Press & Compliance Bookshelf
  • Podcasts
    • Great Women in Compliance
    • Unless: The Podcast (Hemma Lomax)
  • Research
  • Webinars
  • Events
  • Subscribe
Jump to a Section
  • At the Office
    • Ethics
    • HR Compliance
    • Leadership & Career
    • Well-Being at Work
  • Compliance & Risk
    • Compliance
    • FCPA
    • Fraud
    • Risk
  • Finserv & Audit
    • Financial Services
    • Internal Audit
  • Governance
    • ESG
    • Getting Governance Right
  • Infosec
    • Cybersecurity
    • Data Privacy
  • Opinion
    • Adam Balfour
    • Jim DeLoach
    • Mary Shirley
    • Yan Tougas
No Result
View All Result
Corporate Compliance Insights
Home Compliance

Embracing Digital Transformation to Achieve Compliance and Improve Competitive Positioning

Data Collection, Technology and Compliance

by Kevin Byrne
September 3, 2019
in Compliance, Featured
metallic balance with multiple parts

SEI’s Kevin Byrne on why it’s imperative for firms to consider how they use data if they want to remain competitive. Clean capture is crucial, as is flexibility to adapt to a continually changing security environment.

It seems the answer to every question recently has been “more data.” As our data pools grow, so too must our technological capabilities to process it – and protect it. Data privacy laws are proliferating, and as investors are asked to provide more information about themselves, the investor experience has become an integral component in the success of any regulatory program.

Striking A Balance – at Least Half of One

On the one hand, you have multifaceted regulatory challenges and, based on the location and number of jurisdictions in which you operate, you may also have myriad reports and filings with strict deadlines and specific data requirements.  On the other hand, you have investors of varying sophistication and size who are looking for increased transparency, but also wary of offering that same transparency into their own personal data. And it’s understandable; with every announcement of a new leap forward in technology automation – AI, IoT, NLP and so on – comes a different report questioning the safety and motives of said leap, holding up a data breach as evidence.

So, where is the balance? Regulatory bodies have feet firmly planted on their side of the data requirement seesaw. Anti-money laundering and know your customer regulation (collectively called AML/KYC) have had a dramatic influence on investor experiences in recent years. By design, these rules force financial institutions to dig deeper into their clients’ affairs. Devised with the goal of making it harder for criminals and terrorists to do business, AML/KYC policies and processes have also produced less desirable effects related to more intrusive client due diligence. The balance, therefore, must come in the overall experience you offer your investors as you request, retain and report ever increasing amounts of data from them, about them and for them.

To be clear, this is not to say regulatory demands are a bad thing. In the United States, both AML/KYC and the Foreign Account Tax Compliance Act (FATCA), two major regulatory changes in the early part of the 21st century, continue to profoundly affect the digital domain within financial services. One is rooted in a broad crackdown on tax evasion, while the other has its roots in the war on terror. Both have their basis in thwarting criminal behavior; both have affected asset management organizations far beyond the U.S. borders.

FATCA caused ripples to spread throughout the global financial services ecosystem, forcing banks and investment firms to re-examine their processes and technology, not to mention their investor or client base and the information about them they disclose. It also requires inputs from front-, middle- and back-office operations. It is, therefore, crucial that compliance systems be as thorough and discrete as possible while also being automated and efficient.

Regulatory initiatives in Europe are having a similarly global effect, but the focus has been on data privacy. The General Data Protection Regulation (GDPR) of 2016 was formulated to give people control over their personal data and govern the movement of that data outside of Europe. Meanwhile, GDPR and similar laws are spurring innovation by those seeking to develop effective solutions for the issue of data privacy and portability. And again, we see the need for balance here as well. The most efficient ways of gathering or analyzing data may not be the most effective ways when it comes to delivering that data to regulators. Building a platform without taking both sides of that data equation into account could result in a more cumbersome process rather than a better one.

Whether they realize it or not, regulatory bodies are shaping the investor experience as they go. With very little wiggle room around their rigid requirements, the onus falls on the manager to cut through the palaver and make the sharing of information as simple and painless as possible.

If You’re Asking for More, at Least Make it Easier to Deliver

Redesigning processes goes part of the way toward addressing these regulatory needs. The investor’s experience should be as streamlined as possible, with other stakeholders introduced at the appropriate time. If data is captured cleanly and efficiently, it not only simplifies compliance, but also enables easier audits and informs feedback loops that can further improve processes. It should be possible, for example, to prepopulate any form with previously captured information, much like one-click checkouts when shopping online. Well-designed workflows should have the added benefit of consolidating software needs and creating a streamlined, user-friendly process.

Even the most carefully designed investor experience is worth nothing, though, if it is not compliant with existing regulations. The security environment changes extremely quickly, and the push/pull between regulators and tech entrepreneurs drives further change. Innovative new technologies can quickly emerge to disrupt existing solutions and better address regulatory demands. The rapid rate of technological change, combined with an increasingly complex and globally fragmented regulatory landscape, means asset managers will ideally want to work with a partner who understands the whole ecosystem and has the ability to supply technology-enabled compliance services.

Central to this reimagined digital experience is the concept of a single golden record for investor data. Clarity about who is entitled to what data is ultimately needed. Distributed ledger technology (DLT) shows great promise in this regard, but it still remains on the periphery of the industry despite a great deal of interest and development of proofs of concepts.

Flexibility Through Technology is Key

Data drives transformation, but the emergence of certain tools and trends has given it life. Managers sit in the midst of vast overlapping pools of data containing information on market movements, investor behavior, government filings and demographic trends, to name a few. It can be hard, however, to wade through those pools and find the key nuggets of actionable intelligence. APIs provide a way for much of this data to be tied together, and successfully aggregating data is a powerful first step in analyzing it in search of competitive advantage. Ideally, with added clarity, decision-making would improve, marketing efforts would be more successful and employees would be more content.

Given the potential for abuse and fraud, data aggregation is also an area of great concern and scrutiny.

FINRA recently came out with a warning to banks and investment organizations that the risks of aggregation include the “potential vulnerability to cyber fraud, unauthorized transactions and identity theft. A key risk is that the aggregators could be storing all consumer financial information or security credentials in one place, creating a new and heightened security risk for consumers.” Aggregators agree that managing these risks is crucial, but they are also quick to point out that they are in many cases a stronger — not weaker — link.

Firms are also tackling data by applying artificial intelligence and machine learning. Portfolio management has so far been the primary area of application for cognitive computing in the asset management industry, but it is also being used to make operations more efficient, manage risk more effectively and, importantly, improve communications with clients.

Client communications, of course, are also being revolutionized in this digital age by the ubiquity of social media and mobile interfaces. Going forward, interactions will increasingly use new technology like voice recognition, augmented reality and personal assistant software. Investors already use Alexa, for instance, to retrieve their balances and transaction histories.

Adoption of new technology and processes is uneven across the industry. Inertia is a powerful force, and many managers remain wedded to the status quo. This is not altogether surprising when considering the daunting scope and potential cost associated with digital transformation. Forming partnerships with the right organizations can alleviate some of this apprehension (and cost). Service providers and technology firms can bring far more than tactical solutions, weaving together key components of a thoughtfully designed client experience.

Additionally, over the years, we’ve watched globalization and convergence push technology to be agnostic of all things – currency agnostic, strategy agnostic, vehicle agnostic, etc. – able to accept and process all types. We’ve now seen this spill into the need to be “regulator agnostic,” meaning each regulating body wants a set of specific data points and information in the format they dictate and the delivery method and timetable they require. It would be wishful thinking to hope for standardization across them all, so technology must now be flexible enough to check all those boxes. It cannot be rigidly built based on one specific request; it would be almost instantly obsolete. Instead, technology now must be designed to meet all current requirements and be ready to adjust to any potential future demands.

Initiating the process of digital transformation can be unnerving. There’s no question it is a formidable undertaking, but falling behind the digital curve is certainly a recipe for obsolescence. Flexible technology is a key component of any regulatory program, but also in building and maintaining strong investor relationships. As McKinsey notes, asset managers will need “to embrace new ways of working and adopt methods that will be foreign to standard approaches and the existing operating culture.” Yet the payoff “can be compelling.”1


1[McKinsey & Company, “Using rapid process digitization to transform the customer experience,” March 2016.]

Tags: AMLForeign Account Tax Compliance Act (FATCA)GDPRKnow Your Customer (KYC)
Previous Post

Organizational Speed in the Digital Age

Next Post

5 Companies Settle FTC Allegations of Falsely Claiming Participation in EU-U.S. Privacy Shield

Kevin Byrne

Kevin Byrne

Kevin Byrne is Managing Director of Global Regulatory Risk and Compliance within SEI’s Investment Manager Services division. In this role, Kevin is primarily responsible for strategy and new business development for global regulatory and compliance solutions and services. Prior to joining SEI, Kevin served as Chief Compliance Officer for Hirtle Callaghan & Company, a $20 billion+ SEC registered investment advisor. In this role, Kevin had responsibility for all aspects of the firm’s compliance program. In addition, Kevin was responsible for operational due diligence on all subadvisors, hedge funds and private equity funds Hirtle invested in, which included over 70 investment managers. He also served as an officer on Hirtle Callaghan’s Registered Investment Company. Earlier in his career and prior to joining Hirtle Callaghan, Kevin was a consultant for Navigant Consulting’s Regulatory Advisory Group.

Related Posts

monies illustrating money laundering

Power Shift: What Happens When America Steps Back From Global AML Enforcement?

by Joe Biddle
April 15, 2025

EU's new anti-money laundering authority emerges as potential counterweight amid uncertain US priorities

robot reading book generated by ai

Teaching Machines to Spot What Matters

by Kevin Lee
April 8, 2025

How emerging technologies are transforming inefficient alert systems and reshaping financial crime prevention

origami tiger

Paper Tigers Won’t Protect You: The Reality of Effective NIS2 Compliance

by Hans Kayaert
March 24, 2025

Why Belgium's early adoption model could prevent another round of ‘compliance theater’ across Europe

examining data on laptop screen

Privacy Rights Surge Forces Rethink of Data Management

by Gal Ringel
March 14, 2025

As global privacy regulations multiply, organizations face mounting pressure to efficiently respond to data subject requests amid complex data environments

Next Post
server room with overlay of privacy shield icon

5 Companies Settle FTC Allegations of Falsely Claiming Participation in EU-U.S. Privacy Shield

No Result
View All Result

Privacy Policy | AI Policy

Founded in 2010, CCI is the web’s premier global independent news source for compliance, ethics, risk and information security. 

Got a news tip? Get in touch. Want a weekly round-up in your inbox? Sign up for free. No subscription fees, no paywalls. 

Follow Us

Browse Topics:

  • CCI Press
  • Compliance
  • Compliance Podcasts
  • Cybersecurity
  • Data Privacy
  • eBooks Published by CCI
  • Ethics
  • FCPA
  • Featured
  • Financial Services
  • Fraud
  • Governance
  • GRC Vendor News
  • HR Compliance
  • Internal Audit
  • Leadership and Career
  • On Demand Webinars
  • Opinion
  • Research
  • Resource Library
  • Risk
  • Uncategorized
  • Videos
  • Webinars
  • Well-Being
  • Whitepapers

© 2025 Corporate Compliance Insights

Welcome to CCI. This site uses cookies. Please click OK to accept. Privacy Policy
Cookie settingsACCEPT
Manage consent

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
CookieDurationDescription
cookielawinfo-checbox-analytics11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checbox-functional11 monthsThe cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checbox-others11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-necessary11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-performance11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
viewed_cookie_policy11 monthsThe cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytics
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Advertisement
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
Others
Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.
SAVE & ACCEPT
No Result
View All Result
  • Home
  • About
    • About CCI
    • CCI Magazine
    • Writing for CCI
    • Career Connection
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Library
    • Download Whitepapers & Reports
    • Download eBooks
    • New: Living Your Best Compliance Life by Mary Shirley
    • New: Ethics and Compliance for Humans by Adam Balfour
    • 2021: Raise Your Game, Not Your Voice by Lentini-Walker & Tschida
    • CCI Press & Compliance Bookshelf
  • Podcasts
    • Great Women in Compliance
    • Unless: The Podcast (Hemma Lomax)
  • Research
  • Webinars
  • Events
  • Subscribe

© 2025 Corporate Compliance Insights