, Singapore

Singapore banks set to fast-track digital transformation due to COVID-19

By Brett Hodge

The COVID-19 pandemic forced Singapore banks to change tack in order to meet social distancing and work from home requirements. However, it didn’t stop financial crime. Since the pandemic, there has been a significant increase in COVID-related fraud, with criminals engaging in telephone fraud, phishing scams, and even developing fake websites for personal protective equipment (PPE) – only recently a Singapore man was arrested for suspected involvement in money-laundering offences linked to a Covid-19-related scam.

Likewise, the crisis hasn’t stopped financial regulators issuing fines. Despite the impact to supervisory activities as a result of the COVID-19 pandemic, the Monetary Authority of Singapore (MAS) has continued to impose fines in recent months. And whilst we may see a reduction in the volume of fines issued in the coming 12-18 months as a result of the crisis, financial institutions must remain vigilant and adhere to anti-money laundering (AML), know your customer (KYC) and counter-terrorism funding (CTF) regulatory requirements, particularly as the crisis opens the door to more illicit behavior and financial crime.

The current crisis has been a wake-up call for banks across Singapore. The sudden need to deploy and manage a remote workforce, to find new ways to onboard customers, and to streamline regulatory processes has highlighted the glaring need for digitisation. And as a result, we can expect to see banks across Singapore fast-tracking their digital transformation journeys in response.

Digitising the customer experience
Client onboarding requirements have been a key concern for banks and financial institutions for some time, with an increasing focus on the effectiveness of AML and KYC processes and controls. Many banks in Singapore persist with paper-heavy and labour-intensive onboarding processes – particularly private banks and wealth management firms, which tend to be more manual in nature.

Client documentation is often stored across a number of systems, with data siloed by department or branch, leading to inefficient and ineffective onboarding processes. These practices are not only frustrating for clients, but costly for banks, due to high rates of error, duplicated activities, and misplaced data. In fact, a recent survey found that financial institutions are losing up to $10bn in revenue a year, due to poor data management practices.

But as banks across Singapore mandated staff to work from home, and closed numerous branches, it became apparent that these manual processes are no longer viable. Whilst their largely paper and Excel-based operations worked okay when people were in the office, it has proven to be a major challenge whilst working remotely. And in the absence of face to face meetings, many banks had to swiftly adapt and implement remote account opening solutions.

Automating compliance for increased efficiencies
The pace of regulatory change has snowballed since the global financial crisis in 2007. Between 2009 and 2015 alone, 50,000 regulations were created across the Group of 20 (G20). Financial institutions find themselves in a constant battle between impending regulatory deadlines and the risk of non-compliance. This is particularly problematic for financial institutions across APAC where, despite being in the same region, there are over 40 regulators to keep happy; making cross-jurisdictional compliance extremely difficult.

As banks re-evaluate their digital strategies, it only makes sense to ensure compliance is automated in order to easily and efficiently adhere to all AML, KYC and CTF regulations. Regulation technologies, which use Artificial Intelligence (AI), are particularly valuable when it comes to automating compliance. AI can help mine huge volumes of data, automatically flagging risk-relevant facts faster than humanly possible.

AI technology dramatically speeds up the onboarding phase. The technology helps to automatically identify illicit client relationships and alert financial institutions to the possibility of criminal or terrorist activity. With regulatory requirements being constantly updated, it can be difficult for banks to keep on top of these changes via manual processes alone. By implementing AI technology, financial institutions are better able to identify gaps in customer information, with the technology automatically prompting them to perform regulatory outreach to collect the outstanding information – a far more streamlined and hands-off approach to what many banks in Singapore are currently using.

Fast-tracking the future
Speculations about what life will look like post-COVID are rife. But the reality is, we’re not going to be ‘post’ COVID-19 for quite some time. Whilst we wait in limbo for a vaccine or adequate treatment, social distancing requirements and the expectation to work from home will be with us for the foreseeable future; whether that be six months or several years.

As Singapore grapples with this ‘new normal’, banks are left with the same challenges uncovered at the height of the pandemic - that face-to-face customer onboarding, manual identity checks, and Excel-driven compliance is clunky, inefficient, and clearly untenable. Now, more than ever, as we move into the grey area between pre and post pandemic, it’s clear that digitisation for banks is no longer a nice to have, but a necessity.


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