modernize due diligence

Make small steps towards efficient Due Diligence

By | Modernization of due diligence, RegTech

When it comes to due diligence of counterparties in the fund industry, there is a glaring lack of standardization. Compliance officers often find themselves with the ‘goldilocks’ dilemma: if they do too much, they might inadvertently contribute to setting a too high industry standard, if they do too little, their company may be fined. But, the truth is, it will take the industry some time to figure out what is ‘just right’.

However, regulatory demands increase constantly, particularly regarding investor protection and KYD, and there is no room to wait and comply at a later stage. We need to rely on what is emerging as a common base and find efficient work methods. Using tech-solutions as a tool to improve governance, risk and compliance processes to meet the regulatory requirements can be a great way to stay ahead.

It is unlikely there will ever be one “perfect” solution. Therefore, the way to go is to start with small steps, test each step, learn and improve as we go.

To modernize our industry, we must be agile

The term “agile” may just sound like the buzzword of the day, but it actually deserves some consideration. As fund producers and distributors need to service the end investor in the best ways possible, internal processes must keep up with service standards. Scalability and true businesses growth require agile solutions that reduce cost and maximize efficiency.

With any number of regulations to adhere to, it can be downright scary to think of changing a process when we are quite literally using all our energy just to ensure nothing slips through the cracks. When conducting due diligence and risk assessing counterparties, many of us just manage to ensure that all the boxes are ticked. There are seldom resources left to search for a better way to tick those boxes.

Including technology in your work methods can make them more efficient and allow existing teams to do more value-adding tasks. Today, RegTech and FinTech tools are part of most company’s risk and compliance strategies. They improve data quality and user experience as well as maturing the in-house risk and compliance culture. With a few small steps, start to leverage new technologies in the governance, risk and compliance space of your company.

For example, a key component of MiFID II product governance requirements is establishing a complete product lifecycle. Amongst other things, the product lifecycle must outline the target market and ensure that the client’s needs are being addressed. Regular feedback from both the clients (end-investors) and distributors are essential to ensure that products are meeting their target market.  Using a tech-solution for complaints and target market reporting could be one of those better ways to tick the box for client feedback requirements.

Don’t wait, start moving now

Many of us in the fund industry dreamed that a global industry standard would be introduced, but so far this has not happened. It will take time for a universal standard to mature since national regulatory implementation and industry customs differ to some extent. But, it is definitely possible to utilize the current level of standardization. By doing so, we can together contribute over time, to setting a global standard, starting with an EU-standard.

Firms cannot wait for a universal standard to emerge before implementing new processes to ensure compliance with the applicable regulation. It is better to start now, take small steps, test, learn as you go and improve your processes.

If, for example, in your process this year, you go beyond what becomes the accepted industry standard for due diligence you can update your internal processes to align with the industry or your business’ needs the following year. Remember, your internal policies are due for an annual review. In a fast-paced world, internal procedures also need to evolve in an “agile” way.

Technical tools can help you build efficient governance, risk and compliance processes. They are a necessary step to keep up with regulatory requirements. But keep in mind: There is no perfect solution. Taking small steps, testing them and evaluating their success, will get you, and the industry, moving in the right direction.

Want to learn more about how our platform helps speed up due diligence? Book a demo now.

Woman typing on keyboard

How to speed up Due Diligence: Get started today with GRC WATCH

By | Uncategorized

It’s very easy to join our platform and get immediate access to a broad network of companies.

  1. Create an account at no cost in GRC WATCH by clicking here. You can also get invited to the platform by one of your counterparties who is already in the platform.
  2. Complete your company profile by filling out an online questionnaire with pre-defined questions, upload documents and add your contact persons.
  3. Search for your counterparties in the platform to see who is already there.
  4. Let us help you invite 10 of your counterparties to the platform. Just fill out this form and we will do the work for you!
  5. Share your profile with your counterparties to enable them to perform due diligence on you.
  6. If your counterparty does not have a profile in our platform yet, you can invite them to create one.
Daniel Sundqvist, Lannebo Fonder

Lannebo Fonder: GRC WATCH simplifies due diligence

By | Fund Companies

Why did Lannebo Fonder select GRC WATCH for due diligence? Daniel Sundqvist, Head of Sales and Marketing at Lannebo Fonder shares his view:

“We are expanding globally and the number of distributors in different countries is growing. It’s a challenge to monitor all of them on a regular basis, and we realized we had to find a solution for that. Our distributors also started to intensify their due diligence on us around the time that MIFID II entered into force. This means that we are now monitoring each other, so we wanted to find a mutual platform where all of us can work together and perform due diligence in both directions.

An important factor behind our choice of GRC WATCH is that they are completely independent. All of our distributors can create a company profile on the platform with no conflicts of interest.  They can share it with us and other fund companies at the same time. We also liked the fact that GRC WATCH is based on many years of experience related to this type of due diligence, and that is has a great understanding of the fund industry.”

About Lannebo: Lannebo Fonder is a Swedish fund company founded in 2000 by Anders Lannebo together with a group of portfolio managers from fund companies owned by leading banks in the Nordics. Lannebo has approximately 70 billion SEK in AUM across 16 funds and is expanding its fund distribution globally. Lannebo is completely independent, offering active management in certain areas where it possesses unique expertise.  www.lannebofonder.se

Linda Hellström, GRC WATCH and Linnea Wiklund, Avanza

Avanza Bank: GRC WATCH helps us work smarter

By | Fund Distributors

Why did Avanza Bank select GRC WATCH for due diligence? Linnea Wiklund, Product Specialist – Funds at Avanza Bank shares her view:

 “The most brilliant part of GRC WATCH is that it helps us work smarter. Now we can easily monitor the fund companies that we are obliged to check by law as a fund distributor. The fund companies can check us as well in the same environment. We simply connect to each other’s company profiles on the platform, where we can access a standardized set of facts, documents and contact persons. We also get access to reporting and risk analysis tools.

At Avanza we always strive to be early adopters of innovative solutions and to lead digital transformation in the fund industry. Joining the GRC WATCH network is leading to huge efficiency gains. Compared to sending questionnaires back and forth via email to our counterparties, this solution is so much better. It’s exactly the kind of development we want to be part of. The sooner everyone is part of the same network, the sooner we will all benefit!”

About Avanza: Avanza Bank was founded 1999 and has grown from being a small, online stock broker to Sweden’s leading digital platform for savings and investments. Avanza is challenging the larger banks and insurance companies in the Swedish savings market. www.avanza.se

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