4 Crucial Reasons Why BNM Software is a Smart Investment

Blog post Team CENTRL 2022-06-13

Bank Network Management

After the financial crisis of 2008, network management has evolved beyond activities related to agent selection and cost management. The COVID-19 pandemic has also altered bank network management in significant ways.

Today, network managers are also responsible for managing risk, preventing financial crimes, and complying with regulatory requirements. They must also handle the end-to-end due diligence process of hundreds of agent banks.

Network managers relied on manual and siloed processes to carry out these responsibilities in the past. But these were highly inefficient and tedious for both custody managers and agent banks.

These legacy processes are no longer adequate or appropriate in an increasingly complex financial services environment. To save time, improve efficiency, and reduce manual effort, network managers urgently need automated bank network management solutions (BNM) like BNM360.

This article explores four critical reasons for investing in a world-class BNM platform like BNM360.

BNM Software to Automate Bank Network Management

Why Automation is Required in Bank Network Management

Legacy BNM processes are manual and highly fragmented, introducing inefficiencies, errors, and delays. These issues cause problems for network managers, agent banks, and other financial institutions in the ecosystem. Automating BNM can reduce manual work, save time, improve efficiency, and strengthen risk management.

Automation and streamlining bank network management are especially crucial now that regulators take a more proactive interest in the function. Internal committees and boards are now looking to bring more impartiality and formal governance into these processes.

An integrated BNM platform simplifies the end-to-end network management function, including:

  • Agent and account database, with document library
  • Initiating the account opening request
  • Executing account closure request
  • RFP (request for proposal) management
  • Ongoing DDQ (due diligence questionnaire) monitoring
  • Account recertification
  • Issues management
  • Due diligence reporting

BNM Software to Streamline Due Diligence

Due diligence is an integral responsibility of bank network management teams. Since 2008, new and increasing regulations and operating risks have radically overhauled due diligence, which means the level of detail and professionalism in these processes have increased dramatically.

Automated bank network management tools play a vital role in streamlining this critical process for both senders and recipients.

Challenges with the Old Approach to Due Diligence

Before COVID-19, network managers employed a “tactile approach” to perform due diligence, with on-site custodian visits and multiple meetings with personnel from different functions.

To manage the process, they had to deal with mountains of documentation in various formats, exchange emails with dozens of people, follow up multiple times, and keep track of every activity, issue, and communication.

The Need to Automate Due Diligence

Using email and ad-hoc methods to request documents and send out due diligence questionnaires (DDQs) makes the process painful for all parties. Automating due diligence can transform management - from arduous and time-consuming - to analytical and insightful. Here’s where BNM software is beneficial.

Advantages of BNM Software for Due Diligence

A BNM platform automates the end-to-end DDQ process to save time and effort. It digitizes all questionnaires and document request checklists, supports automatic scoring for impartial analyses, and centralizes all evidence in a single repository.

It provides a system library with AFME (Association for Financial Markets in Europe), and other templates that senders can easily customize to fit every due diligence process. They can also effortlessly:

  • Edit standard templates or upload proprietary questionnaires
  • Configure their scoring frameworks at template level
  • Auto-assign questions and sections for SME evaluation
  • Publish assessments to agent banks in bulk
  • Create output reporting from the due diligence assessment and meeting

The software also simplifies the process for recipients. They can assign the request to internal teams and track progress. The completed questionnaire and relevant support documentation can be consolidated into a single package and returned to the requester.

The best BNM DDQ automation platforms like BNM360 also centralize communication so that nothing ever gets lost in someone’s email inbox (or spam folder).

Benefits like increased efficiency, greater control, and reduced subjectivity in evaluation are compounded exponentially when applied to all due diligence processes over time, whether by a sender or a recipient.

BNM Software to Strengthen Risk Management

In addition to standardizing and simplifying due diligence processes, BNM software also helps improve real-time risk monitoring and oversight of agent banks by network managers.

Why Streamlining Risk Management Is Crucial

In the modern, complex world of BNM, network managers are required to manage the selection, oversight, risk, and cost of hundreds – if not thousands – of agent-bank relationships around the world.

Existing BNM processes are not adequate to keep up with the challenge. If anything, they create more inefficiencies and increase the potential risk exposure for all parties.

Risk Management Requirements for Modern BNM

Custodian banks and their managers need a secure, efficient, and encrypted platform to sort and analyze DDQs. Equally important, they have to categorize risks into different tiers and see how they change over time.

Continuous monitoring and risk profiling are also crucial in the modern-day BNM and DDQ landscape. BNM software can automate these functions and trigger alerts when concerns are detected.

Improved Risk Management Requirements with BNM Software

BNM software like BNM360 function as a “two-sided network” to enhance risk oversight for network managers while reducing costs, boosting profitability, and increasing efficiency. At the same time, it reduces the risk burden for agent banks.

The platform provides automated workflows, making it easy to schedule DDQs by risk level. Furthermore, it helps track risks and gaps, either based on DDQ responses or independently. Network managers can conduct ongoing risk assessments and continually view data for regulatory compliance and performance management.

Dynamic dashboards and insightful analytics create risk scorecards for agent banks and at the account level. They save time and effort by:

  • Automating the evaluation process
  • Pre-populating assessments with a previous year’s answers
  • Review only where risk has changed to identify where actions are needed

BNM software provides a centralized view of agents, so network managers get advanced oversight into agent-bank relationships. It helps mitigate the risk of separate stakeholders within banks establishing their own network solutions. All service providers can be monitored to minimize counterparty risk for global custodian/broker-dealer clients.

BNM Software to Streamline Compliance

Network managers must oversee the regulatory and operational performance of agent banks and financial market infrastructures (FMI) providers. Agents could include sub-custodians, cash correspondents, while FMIs might consist of payment systems, central counterparties (CCPs), and (International) Central Securities Depositories ((I)CSDs).

To ensure that all regulatory compliance and legal obligations are met, network managers must collect supporting documentation, evaluate data, and coordinate with multiple stakeholders. These manual efforts are time-consuming and tedious.

An automated BNM software centralizes documents and makes it easy to keep track of prepared questionnaires and responses in segregated repositories. It thus provides an effective system to improve communication between various departments and meet compliance requirements.

A BNM platform also provides comprehensive audit trails for better internal and external collaboration. Network managers can monitor agent-bank relationships closely, track all issues and resolutions, and support audit requirements as needed.

With BNM software solutions like BNM360, agent banks get a single library of all uploaded documents with a complete audit trail so that they remain audit-ready at any given time.

BNM360 Helps Ease the Challenges of Bank Network Management

BNM360 is the most comprehensive bank network management system to automate risk monitoring and oversight of agent banks by network managers.

Old-fashioned fragmented network management processes can no longer meet modern-day demands and challenges. Network managers need an automated system to streamline DDQ monitoring, issue management, account management, re-certification, and risk analysis. BNM360 provides all these capabilities and more.

Almost every part of the network management process can be automated with BNM360 to improve efficiency and user experiences, save time, and reduce costs. For instance, automating DDQs can save countless hours for network managers and recipients.

The software also allows network managers to speed up evaluations by auto-assigning questions, pre-populating previous cycles’ responses, and auto-scoring yes / no and multiple-choice answers.

BNM360 also supports network management scalability. Scalability is crucial. With a global network managers need to connect remotely and conveniently to them – especially with COVID-related travel restrictions in place.

With BNM360, network managers can conduct due diligence effectively with the help of automation, centralization, scheduling, templates, and reports. The platform makes workflows and follow-ups easy. It also accelerates evaluations and supports remote communication.

BNM360 provides multiple modules and features to help network managers:

  • Automate scoring
  • Extract and normalize data from DDQs
  • Get 360-degree views at the agent-bank level
  • Conduct ongoing risk assessments and profiling
  • Identify, segment, track, publish, and remediate issues from each DDQ

Agent banks can also manage the DDQ process from their side with BNM360. They get a consolidated view of all DDQs and delegate DDQ questions within their organization. They can also upload documents, respond to clarifications, and publish pre-filled standard DDQs to network managers.

Request a free, no-obligation demo to see how some of the world’s largest banks achieve cost and efficiency savings of more than 70% with BNM360.

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