Rethinking Risk Management: Conquering Financial Compliance Challenges

Financial and compliance institutions continue to face ever-changing challenges as fintech services become increasingly in demand.

Published on October 17, 2022
Last Updated on October 17, 2022

The pandemic has brought about unprecedented changes in the financial world; the digital boom that followed has been a catalyst for customers who have to rely on it, as well as the fraudsters and financial criminals seeking to exploit it. Today, Financial Crime Compliance (FCC) and the act of prevention is one of the fastest-growing areas in risk management. New technology, fintechs, and regtechs are at the forefront of this ever-evolving sector, triggering seismic demands and growth over the past few years.

An evaluation of risk management services designed to combat compliance costs, provides four major challenges that different buyer segments of non-core financial institutions are grappling with.

Cost of Compliance

The cost of compliance in the risk management space is by far the most consistent overarching problem, with recent estimates reaching a substantial $213.9 billion in 2021 compared to $180.9 billion in 20201 – an increase of 18% (~$33B). As costs continue to grow, organizations are searching for answers to the inverted trend line of effectively combating increasing levels of fraud and financial crime with stagnant or diminishing budgets.

Rising Regulatory Complexity

Financial institutions like banks have had years to build large Anti-Money Laundering (AML) and Know Your Customers (KYC) frameworks to help “decode” regulations and their applicability, further aiding in risk response. However, “new-age” neo-banks, Buy Now Pay Later (BNPL), and cryptocurrencies do not have that luxury, purely by virtue of being in their nascent stages. Many times, this creates a vacuum between disruptive technology aimed at providing additional value to customers, and the regulatory obstacles that new technologies inadvertently supply. Successful implementation and rollout requires an equal prioritization of both to ensure there are no gaps that can be exploited by nefarious actors. Failure to do so will ultimately result in drains on the organization’s time, capital, and trust from both its customers and the regulatory bodies it complies with.

Lack of Speed

Backlogs and remediation programs have heightened in the past few years and slowed down growth, leading to firms losing customers. Long gone are the days of multi-process KYC procedures and week-long onboarding processes—today’s customer expects and demands more from business compliance services.

Reputational Risk

Customers empowered by broadband and smartphones not only demand faster, easier, and more direct access to financial products and services but also security of their personal information. This creates a need for risk management solutions that help minimize the risk of breach, more secure information collection techniques, and internal mitigation plans to help limit damage to the organization’s reputation from hiccups along the way.

The Evolution of Business Compliance Services with Us

TaskUs, along with other members of the compliance services and risk management solutions communities, have made great strides over the past few years in building comprehensive offerings that complement and expand the capabilities of clients in FCC. In addition to the digitally-enabled offerings around identity verification, regulatory compliance, and fighting fraud, there is also a demand for Advisory Services coming in from the key tech industries of fintech, blockchain, digital marketplaces, and web3.

We also have the capability to do need-based short-term deployment of risk management services through our flexible crowdsourcing model. Our investments in leading-edge tech enabled us to provide TaskUs-piloted innovations to 80% of our clients.

Focus on Customer Experience

Customer experience is key to customer acquisition, especially for TaskUs’ key buyer segments—fintechs, online investment platforms, crypto exchanges, and e-commerce businesses. Because users can easily move to a competing app with little friction, user retention is paramount.

To retain users, there has been a huge increase in demand from buyers for solutions that improve the customer experience in FCC. Customers don’t like long onboarding and due diligence processes. Hence, there is a demand to make KYC, KYB, and transaction monitoring processes streamlined and more user-friendly. KYC process backlogs are hurting new user acquisition and retention metrics. This has made it critical for TaskUs to have risk management solutions that speed up the process.

E-commerce businesses are seeing new types of fraud emerge in the online marketplace, rendering traditional fraud prevention methods obsolete against new scams. There is a need to use new technology to detect new fraud types and clear high volumes of false positives at a low cost. These risk response solutions enable a better and more fulfilling customer experience.

Recognition by Everest

Recently, Everest Group identified TaskUs as a Major Contender from the 27 FCC Operations Service Providers featured on the FCC Operations – Service Peak Matrix. The assessment is based on Everest Group’s annual RFI process for the calendar year 2021, interactions with leading compliance services providers, client reference checks, and an ongoing analysis of the FCC Operations market.

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The TaskUs Model

TaskUs differentiates itself from the other 27 providers in a few key ways. We specifically cater to the unique demand from digital & neo-banks, fintechs, e-commerce marketplaces, and blockchain disruptors. Referenced buyers have highlighted the cultural fit and high employee engagement initiatives as our key strengths. We have cultivated our strong skill set in the compliance services space on the back of our historical experience in handling digital customer experience for FCC clients. We have also been appreciated for our speed, agility, and scalability.

This recognition has been a true testimony to the value that we are delivering for our clients.

With the FinCrime industry shifting towards digital transformation, the vulnerabilities continue to manifest and the expectations of buyers are to ensure that there are repeatable and high-quality processes, reliable and consistent risk response controls, improved customer experience with streamlined digital interactions, enhanced transparency and governance, and effective due diligence processes with ongoing monitoring using simple and effective data analytics and tools. With our robust CX-led solutioning and domain expertise, we are well-positioned to tap into the expansion of the compliance risk management demand, globally.

  • 1^Global True Cost of Compliance 2020 Report
Learn more about our risk management solutions.

References

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Surekha Nagpal
Senior Director, Financial Crime & Risk
Surekha has 20+ years of experience across financial crime compliance, business transformation, operations and talent acquisition. She drives aspects of the go-to-market strategy, social media engagement, and strategic initiatives.