Strategic Frameworks for Effective FinCrime Programs
Originally published on LinkedIn April 8, 2016
There may seem like no greater challenge than building a sustainable financial crimes program within a financial institution. With polarizing forces at play, building a program that supports national security and law enforcement missions while simultaneously supporting the growth and profitability of the financial institution is a daunting task. Having been in the trenches at multiple financial institutions over the past decade, the one common thread I have seen time and time again is the narrow or tactical approach to the challenge. Simply stated, financial institutions often overlook the value of comprehensive strategy (planning, frameworks, execution, and intelligence). The value of a comprehensive strategy cannot be overstated.
The first step to developing a comprehensive strategy is investing in people. An institution, that truly wants to achieve balance and sustainability, will make an investment at the executive level. Investing in strategic thought leaders and true practitioners is fundamentally the staple of a financial crimes program that has a shot at scalable sustainability. Empowering and integrating the financial crimes executive amongst the senior most leadership of the institution is the second necessary step. The empowerment aspect speaks to allowing the executive to run the program as another business leader would run their respective vertical within the institution. The integration aspect speaks to having cultural connectivity and the ability to see the institution horizontally vs. vertically within a risk, compliance, legal or operations silo.
In following the people, or human capital theme, organizing resources and functions within logical structures may seem like an elementary thought; however I have found that most institutions still struggle with organizational structures that facilitate connectivity, foster collaboration, and bring forth efficiencies and cost savings. Organizational structure is the second staple and perhaps the most important framework for a financial crimes program to be both efficient and effective.
Moving away from the simple complexities of human capital models to process designs or functional program areas (“operations”). Functional program areas (surveillance, investigations, reporting, due diligence, etc.) are the most vulnerable to tactical approaches or a general acceptance to an operational way of life. In reality, strategic operations are as simple as deploying conceptual designs (lean business processes) and standards (high level operating procedures); executing against the designs and standards; tracking and measuring the execution; and ultimately assessing and learning from the operational intelligence. Culminating with a management consumption of the intelligence that leads to action (policy or operational shifts).
Finally, the emergence of data science analytics and technology. While big data, advanced analytics, and technology enablers are being marketed as the problem solvers of today; in reality 95% of financial institutions cannot even get over the tactical elements of their program priorities (attributed to the lack of comprehensive strategy and planning) let alone make investments in advancements. The 5% that are positioned to staff, deploy, and exploit analytics and technology enablers will see remarkable advances in their programs and legitimate ROI. This ratio, while a matter of insights and opinion, seems grossly lopsided in an industry that substantially values benchmarking and peer analysis.
Bringing this all together concisely, strategic frameworks are meant to be methodical and nimble. The people, process, and technology (PPT) approach is not new to organizational transformation. However, it may be the most overlooked approach within institutions implementing, redesigning, or trying to desperately sustain their financial crimes program. In closing, the most interesting question may be — do the polarizing forces inhibit developing a comprehensive strategy?
