Mr.Natsukashii

Streamlined Financial Compliance

Platform Redesign • Pilot with 2 Banks

DEMO

Streamlined Financial Compliance

Platform Redesign • Pilot with 2 Banks

Anatomy of regulations

In the financial services sector, new laws and rules are developed according to the "Lamfalussy Process”.

Broadly speaking, any given regulation refers to a particular entity of a business and it requires a particular regulatory process in order to prove compliance. More specifically, any given regulation contains articles, which contain rules. These rules specify to which entity they apply, to which business scope and what regulatory process it requires. Each process has inputs and outputs that can be tracked. Therefore if the regulation applies to an entity, it must perform a particular regulatory process and prove so, in order to be compliant.

Fimantic's legislation information architecture

Legislation may take the form of Regulations or Directives. Delegated or Implementing acts are used to ensure the uniform conditions for implementing Regulations or Directives. Regulatory or Implementing Technical Standards (RTS/ITS) are used to address technical points of implementation. They must not involve strategic decisions or policy choices.

Overwhelming regulatory pressure creates more compliance gaps

The sheer number of regulations that the financial service industry is responsible for tracking is huge. Regulations like Basel/CRD/CRR and MIFID/MIFIR comprise over 20,000 articles

Annotation dialog

Financial institutions face massive compliance costs

A report from McKinsey & Company across 20 large EU & US banks for the period of 2009-14, found that operating income had decreased by 10%, while regulatory fines and settlements increased by almost x45. It is not uncommon for a global bank to spend €1.5 billion on compliance costs on an annual basis (3%-10% of operating expenses) while others studies put the numbers as high up as 15%. Europe, for instance, accounts for 6.3% of global AML fines levied in the last 10 years, totaling $1.71 billion across 84 separate fines.

Juniper, "Research Strategies for Financial Services, 2017"

The manual effort behind compliance

A financial auditor reviews a company's financial statements, documents, data, and accounting entries. They gather information from a company's financial reporting systems, account balances, cash flow statements, income statements, balance sheets, tax returns, and internal control systems. Typically they capture data manually using Microsoft Excel or Word. Their goal is to gain an understanding of the company's purpose, operations, financial reporting systems, and known or perceived errors in its organizational systems.

The information from an auditor's analysis is used to develop recommendations and specific action items, like suggesting changes to internal controls and financial reporting procedures to enhance the company's efficiency, cost-effectiveness, and overall performance. However, management has final say when it comes to adopting recommendations, accounting policies, and for establishing and maintaining internal controls.

A financial auditor's process

Fimantic's initial approach to the experience

The process was fairly linear and unfolded sequentially. A group was made up of people working on compliance for a particular aspect of an organization. Inside a group, you created different entities, added members, and adjusted the regulatory and business scope of their work. Once that was done, members started answering questions about the organisation, the implementation of processes and matched the inputs to the output of those processes.

DEMO

Financial auditors don't want progressive disclosure

Two major insights we discovered while running user interviews were that financial auditors were used to parsing large amounts of informations at any given time and that they found Fimantic's linear step-wise approach to determining compliance restrictive.

At any given point I'm keeping track of 20 different things, talking to dozens of people and exchanging information with multiple departments. It's like putting together a puzzle, I try to start with the corners and work my way in but that almost never turns out to be the case. It's messy…

— J.R., 47/M, Financial Auditor

Therefore, the system needed to provide full visibility and control over the information they were handling while being flexible enough to let them shape their compliance path.

Auditing the system's architecture to understand opportunities and limitations

Mapping users' needs to the existing framework

Reconciling complex database logic with an intuitive interface design

I worked closely with the Product Manager to determine what the main module should do and what the system could afford to do. We removed the step-wise approach and instead opted for contextual panels that adjusted to a user's input.

We built a PDF & CSV Annotator for users to highlight relevant parts in documents for more a more granular compliance trail while providing more data for Fimantic's model.

BeforeAfter

Architecture of Fimantic's Regulatory Landscape

In the Regulatory Landscape, all regulations are stored, broken down, and presented in a structured way. An auditor keeps track of changes and updates here. They filter parts of their business and answer all related regulatory items. These answers inform a repository of policies and processes that need to be in place. By providing the relevant proofs they are able to build a granular audit trail in the system.

Wireframes for interaction panels of Regulatory Landscape

Navigation patterns

Any parent regulation and any given business scope can have multiple nested children. Additionally any parent themselves could trigger a different context in the system. We created a tree navigation that mirrored the file explorer interaction found in Windows & MacOS systems which auditors were familiar with.

DEMO

Fimantic's navigation experience

On the other hand, contextual panels become a cornerstone of the system. When triggered they allow users to explore a regulatory item in more detail, answer questions about it, see history of changes and attach proof of compliance.

Contextual panel for referencing compliance proof

Making compliance work accessible

We successfully piloted with one Dutch bank and one international bank, validating the core value proposition and compliance methodology. Critically, feedback focused on data validity and accuracy rather than usability issues, confirming the interface successfully enabled users to engage with the complexity. By centralizing the regulatory database, monitoring, and documentation, we streamlined the compliance workflow and made intricate regulatory logic accessible.

Download CV

Copy Email

Index