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Across the globe, banks are facing major issue with digital banking, cyber security, regulatory audit and compliance issues. Further, any lapses found during internal / external or regulatory audit of the bank would lead to regulatory fines levied based on the issues ascertained. The reputation of Bank is founded on trust from its employees, clients, shareholders, regulators and from the public in general.
Every bank would like to have a robust system, which can help them to identify the issues in advance and report them real-time or periodic basis for further investigations and mitigate the risk. This will help bank to address the regulatory and compliance issues, which will have huge impact on enormous fines from the financial authorities.
Highlighting key system audit issues faced by the bank globally for your reference.
- Data integrity issues (KYC, AML) to know the accuracy and authenticity of data collected by the Banks, FinTech companies and regulators. This has huge impact on customer identification and transaction processing with relevance to remittance and International payments.
- Integration or upgradation of legacy system with inconsistent data to newly migrated applications. This leads to provide dummy data to meet the new system requirements and internally will have impact in reporting due to inconsistent data.
- Failure to maintain Data warehouse solution (DWH). As few banks and financial institutions fail to maintain DWH solution as per regulatory requirements provided by the central banks. This will have impact on performance issue and data extraction for reporting of historical data from the existing systems.
- Failure to maintain reconciliation of General Ledgers / Suspense Accounts for at regular intervals. This will have impact on financial reporting for the FY period. Recon teams with traditional ETL tools do much of this reconciliation work manually with help of spreadsheets. The major impact on reconciliation involves new data sources, unstructured data, new regulatory changes and huge volume of data, which makes reconciliation process complex in nature. Considering the amount of detailed information in the statement, error in the report can very badly affect the bank’s reputation image.
- Exception Ignorance, User while processing the transaction ignore or bypasses the information provided by the system and workflows prescribed. This can be done without authorization, elevate their privileges or access level. This will lead to ignore critical information provide to user and they misuse the application according to their needs.
Let us see how banks and financial institutions overcome all these system audit issue with latest technologies.
Artificial Intelligence:
Artificial Intelligence (AI) is fast evolving as the go-to technology for major Banking and financial institutions across the world to personalize experience for customers / SME and corporates. Banks use AI in the following areas to address the major problems faces by them.
With so many numbers of advantages, banks must consider AI / ML / RPA as the technology for change. They can provide the edge over competition with reduced cost and improved efficiency for significant growth in business. Only through digitization of system, bank can have control over regulatory fines and charges levied by the authorities and provide better services to its stakeholders.
This content is provided by an external author without editing by Finextra. It expresses the views and opinions of the author.
Alex Kreger Founder & CEO at UXDA
22 August
Nick Green Director at Purple Patch Broking Ltd
Priya Kumari
20 August
Oleg Stefanet Chief Risk Officer at payabl.
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