Bank Customer Experience (BCX) Summit
Complying with banking regulations without sacrificing CX
A panel at the Bank Customer Experience Summit analyzed banking regulations and how banks can comply without sacrificing the customer experience.
October 25, 2024 by Bradley Cooper — Editor, ATM Marketplace & Food Truck Operator
Banks have a large list of regulations they have to follow, from anti-money laundering issues to know your customer and laws surrounding fraud. The regulations can at times bog down customer experience transformations.
A panel at the Bank Customer Experience Summit, held in Charlotte, North Carolina from Sept. 9 to 11 examined this issue.
Young Pham, chief strategy officer for CI&T, moderated the panel. Panelists were Chris Roede, attorney for Poyner Spruill LLP and Richard Rotondo, chief digital strategies/consultant for Digital Vision Banking.
Pain points
The panelists identified particular pain points with the customer experience. For example, Roede said it can be a pain point if the bank hasn't properly onboarded the customer for other services or if the bank, "can't provide accurate information of why they were or weren't approved for credit."
Rotondo brought up banks will need certain forms of minimal data whether that's an ID or anti-money laundering processes.
"You can't make the regulation totally frictionless. If you make it so frictionless, you'll get bad people in the kitchen," he said.
Compliance
Roede said that when it comes to new technology, the Consumer Financial Protection Bureau has made it clear that there's no new technology exception to banking regulation. The bureau, in many ways, has turned away from regulatory sandboxes as it saw actors taking advantage of it.
Roede recommended banks first take a "30,000-foot view" to identify any major issues. From there, get in touch with a lawyer to fine tune it.
"You need to make sure you have a compliance program or strategy and describe it in English. Lawyers can help you what the regulatory compliance will be based on the jurisdiction," Roede said.
Rotondo said technology can help remove friction in these compliance programs such keeping the technology working in the background, "where people may not realize what's going on behind the scenes."
AI
AI was a key topic at the panel, and the panelists had a variety of perspectives on the technology. Rotondo said that with AI, it'll be "easier to identify potential risk and fraud at the furthest perimeter point."
Roede said banks need to consider how the AI will interact with past systems and ensure they take full responsibility for the system.
"AI learns from past conduct. If the past conduct wasn't compliant, it'll regurgitate those same bad systems," Roede said.
He pointed out a few issues where there's been litigation because businesses were using AI for hiring and it was performing the process based on previous hires. As a result, the AI didn't increase diversity. Banks need to be upfront about how they use AI and give reasons, such as giving customers a reason for why they were denied credit by an AI tool.
Rotondo agreed, adding that with AI being so new, "I would caution people to use it very judicially."
"You need to know what your AI is doing to be comfortable with it," Roede said. This includes features such as chatbots, fraud prevent, CRM and more.
Compliance culture
When looking at compliance more generally, Roede said you need to build a "compliance culture" from top to bottom in your organization.
"The business people want to hear yes and the compliance can't always tell them yes. The business has to know there's lines you can't cross. That takes a lot of education. You need compliance people that are willing to educate people so you have compliance end to end," Roede said. "As a lawyer, I don't see my job is to say no but to say no, but, and then give another option."
Rotondo agreed, saying, "Loop them in early, makes for a much better collaborative process and they can sleep at night and we can sleep at night. Don't operate in a vacuum."
Ultimately, banks will always have to consider regulatory compliance no matter the technology but with the right support and buy-in, they won't have to sacrifice the customer experience.
The Bank Customer Experience Summit is operated by Networld Media Group and covers the banking industry in depth. For other events run by Networld Media Group, check out the upcoming Self Service Innovation Summit, being held in Tampa, Florida from Dec. 9 to 11.
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