Digital Transformation: The Compliance Problem 

This is the sixth post in my series looking at factors that keep financial services organizations from creating more Turbo-Tax-like experiences for their customers. (Click here for my inaugural post, which gives you an overview.)

Just to recap, there are as many as seven factors blocking these firms from being able to digitally transform and offer their customers a more guided experience model:

  1. The Demographic Problem
  2. The Process Problem
  3. The Business Case Problem
  4. The Technology Problem
  5. The Content Modularization Problem
  6. The Compliance Problem
  7. The Digital Transformation "Tunnel Vision" Problem

With this post, we now arrive at the penultimate item on this list: The Compliance Problem.

You’ll often hear business and operational leaders claim that it’s the folks in Compliance or Legal who are delaying their digital transformation objectives. To hear them describe it, they would be a best-in-class digital organization if it weren’t for that pesky compliance department.

In my experience, compliance and legal departments present a range of various degrees of openness to the digitization of processes, based on their corporate mandate. But as a rule of thumb, they’ve tended to err on the conservative, paper-based end of the spectrum.

This causes a lot of difficulty for the organization that is attempting to embrace content modularization in its form design process. If you’re a national property and casualty insurer, for instance, you likely have state-by-state differences in the disclosures required on a specific form. If you modularize your content, you can produce unique forms for each of the 50 states, while maintaining only a handful of templates. But in many cases Compliance is still going to want to see the final output for each state. Worst case, you will develop and maintain 50 forms, each with minor regulatory variations. But even if you move forward with the modular approach, your team will be stuck keeping track of the approval process for 50 forms—not as bad as maintaining each form as a separate template, but still time-consuming.

To use a different example, a forms management group might be interested in developing a guided experience for client onboarding, but Compliance requires the ability to audit any possible variation of the experience. This means finding a way to expose all possible variations of the guided experience and submitting it in a reviewable format.

And despite the fact that federal guidelines for e-signature were put into law nearly 20 years ago, many compliance groups are still suspicious about approving the use of e-signatures.

Compliance can be a significant roadblock for organizations attempting to simplify their language to make documents shorter and more customer-friendly. We’ve seen many language simplification efforts die a long, slow death under the red pens of the ever-invasive Compliance people.

But there’s an argument to be made that digital transformation helps an organization be more nimble in response to regulatory changes—i.e. propagating the necessary changes to all forms, to all channels, helping to ensure the organization remains compliant with the new regulations. This particular benefit would be a good argument to use to get those internal compliance folks on your side. In fact, some of the organizations we’ve worked with have begun their journey to digital transformation with exactly this line of thinking.

At the end of the day, though, Compliance doesn’t make decisions; it provides advice. The onus for transformation is on business and operational leaders who are responsible for understanding the risk, as described by their organization’s compliance function, and then weighing that risk against the business advantage of providing a better customer experience and operational efficiency. So we advise business leaders to go out and ask for a second opinion on the perceived risks, whether from their own compliance group or from an outside advisor. We find that the organizations which are succeeding with digital transformation are balancing the advice they get from Compliance with the benefits of transforming their processes, seeking advice from compliance professionals familiar with digital capabilities, instead of relying exclusively on the advice of the stock representative they’ve been provided with, right out of the gate.

If you'd like help in transforming your business processes, whether addressing the Compliance Problem or any of the other problems on our list, click here and we'll be happy to speak with you about the services Doculabs can provide to help implement digital transformation at your organization.
Rich Medina
Lane Severson
I’m a Practice Leader, managing relationships with Doculabs’ West Coast clients to improve information management and security.