Bringing “tribal knowledge” into the digital banking era

For many, the term “Tribal knowledge” invokes a definition of historical and sometimes secret knowledge transmitted from generation to generation. Although this notion is no longer common in our communities, the concept is still very much alive and necessary for banking leaders. “Tribal knowledge” when it comes to the financial industry, is a cherished and often inspiring culture for differentiation that requires employees to help each other in person to pass on generations of business knowledge. Now that social distancing guidelines are firmly in place due to the COVID-19 pandemic and conversations about the long-term status of remote work policies are underway, banks have been forced to transform into a unprecedented pace. This has made the financial services industry question whether and how the tribal knowledge of its employees will survive.

Maintaining tribal knowledge in a highly digitized future

Historically, financial institutions have been slow to embrace automation technologies and digital back-end processes. For decades, the regulatory processes of Customer Lifecycle Management (CLM) and Know Your Customer (KYC) have been largely managed manually. Both are essential in anti-money laundering (AML) efforts to verify the identity of each customer and assess their credentials before incorporating them into the loan process.

The tribal knowledge that protects institutions takes years to acquire. Because regulations are constantly evolving, banking professionals must constantly keep up to date. Today’s dispersed workforce means inexperienced employees can no longer rely on the in-person guidance of seasoned industry analysts to reduce the amount of “bad money” seeping into the system. Employees are physically segregated, hampering knowledge transfer that previously took place organically. This pandemic has underscored the need for another way to share critical tribal knowledge with remote employees.

Operations can remain productive in a dispersed work environment

Since the COVID-19 hit, industry reports show that suspicious activity has increased. Not only are banks handling exponentially higher volumes of requests under greater pressure, but “bad actors” are getting smarter about money laundering schemes and smaller loans are getting harder to get through normal channels. For example, when the Payroll Protection Plan (P3) was rolled out to those in need last spring, banks rallied to accelerate billions of dollars for small business loans. Every week, the needs increased exponentially, making it difficult to meet the demand. Many financial institutions have rushed through the manual process of granting loans, and some bad loans have slipped through the cracks.

In today’s distributed world, a digitalized tribal knowledge resource can aggregate the complex regulatory requirements that support AML. These rules and regulations can not only fill a two-inch workbook, but they vary by region, by product, and by situation, and are constantly being updated. Non-compliant financial institutions have been fined around $ 30 billion to $ 40 billion over the past five years, which is a blow to any institution’s bottom line. These losses can be minimized if banks find ways to crush complex processes and encapsulate the tribal knowledge that analysts need to do their jobs in today’s virtual world.

Automate the information gathering process

Banks need to protect their institutions by implementing systems with automated, data-driven rules so remote workers can seamlessly perform customer onboarding, background checks, and expedite loan agreements. Onboarding a client includes assessing their creditworthiness, performing due diligence, and monitoring account and deposit activity for any suspicious activity or red flags once they are it was established. If financial institutions start with a strong rules-based system that includes the latest regulations at the start of every transaction, workers can continue to interact with existing processing systems, minimize errors, and be more efficient. A small group of experts can maintain the rules and change them based on emerging regulations so that everyone, no matter where they work, can benefit.

Digital solutions allow loan officers to retrieve critical information on the spot. They can see the customer FICO®, know immediately what other loans this client might have and what their risk might be, while minimizing the risk for the bank. Digital tools allow loan officers to speed up the process across multiple interfaces, including their mobile phones. With guidelines built right into the system, accuracy and efficiency improve dramatically.

There will always be bad actors who try to outsmart financial institutions and disguise illegally obtained funds as legitimate income. But with automated tools that capture essential tribal knowledge, it’s much easier to stop a bank from helping with money laundering or compromising its integrity.

Through Alex dixon, Global Head of Customer Lifecycle Management and KYC at Pegasystems

About John Tuttle

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