31st Jan 2023

Building Operational Resilience in Financial Services with a third-party banking partner

The importance of operational resilience within the financial services industry is more than just a ‘hot topic’; it’s in fact a key focus for many finance professionals as we enter 2023.

Our recent Drive to Digital Report: Key Finance Transformation Trends 2023 discovered that 58% of respondents cited technology adoption as their key focus, closely followed by 45% seeing regulatory compliance & risk mitigation as another key objective. Technology adoption and reducing risk is closely linked. Traditionally, corporate banking operations have been labour-intensive and time-consuming which leaves these processes open to risk through both human-error and potential fraudulent activity. There is a growing awareness of the advantages that digital transformation can bring in terms of increasing efficiency and reducing risk for finance teams. However, identifying the right technology to implement in order to achieve this goal is identified as a major challenge.

The level of regulations differ across different industries.  However, in regulated sectors like financial services, there has been a rise in regulatory measures, especially following the COVID-19 pandemic. Third-party platforms aide digital transformation and can provide companies with the tools and procedures necessary to stay compliant with regulations and help to prepare them for regular financial audits.

In this blog, we will focus on the ways Financial Services businesses can build operational resilience across their payment infrastructure with corporate-to-bank integration.


Is your payment infrastructure compliant with the FCA and PRA?

With the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) releasing joint guidelines on operational resilience, SYSC (the FCA’s systems and control sourcebook with operational resilience guidelines) lays out clear instructions for firms, ensuring they have the appropriate systems and controls in place. It’s important to understand how this will affect an organization. With a final deadline for compliance set for 2025, if you already have an approved strategy in place, that’s fantastic. However, for those who may still be in the process of implementing changes, we hope this blog will help provide you with some valuable insights into how to achieve operational resilience across your banking processes.


Staying resilient in an ever-changing technological landscape

Operational resilience is an ongoing initiative that requires constant attention and adaptation. It’s not a one-time task, but rather an ever-evolving process. What may work for your organization today may not be effective in the future. No matter where you are in your operational resilience journey, whether you are just starting out or have already implemented changes, it’s important to stay informed and adapt to new developments in the field.  By staying up-to-date with the latest best practices and trends, you can ensure that your organization remains resilient and is prepared for any challenges that may arise.


Identifying vulnerabilities in your corporate banking processes

One of the most important challenges finance professionals face is ensuring that their systems and processes for handling payment files and transactions are robust and secure. This often involves reviewing existing payment controls to ensure they are adequate and effective in preventing fraud and potential data breaches. Gaining accurate visibility and insight into all the different parties involved is key as this will help identify potential vulnerabilities and areas for improvement which will in turn highlight the overall resilience of their payments infrastructure.


Removing the reliance on manually logging into online banking portals

Manual login into online banking portals is a common issue for many businesses in the financial services industry. Typically, the process for submitting payments involves finance or treasury teams using online banking portals to manually input or upload payment files. There are ways to automate this process by generating payment files from back-office or accounting systems, but this still typically involves a person manually transferring the file and uploading it to the bank’s portal.

This manual process is full of risk as there are multiple points where human error or fraud can occur. For example, a person may input incorrect data or a fraudster may access the financial data during the transition from one system to another. Firms need to automate these areas to reduce the risks associated with manual processes.

This is where a third-party like AccessPay can help. Customer Darlington Building Society recently implemented automation in their payment process and has since seen a significant reduction in the risks associated with their previous manual processes.

They have also been able to improve their operational resilience in line with the guidelines and now see AccessPay as a “key partner to their operational resilience”. More on this below.

Why choosing the right third-party solution is critical

Choosing the right third-party is critical not only from a business perspective, but also from a regulatory perspective. It is essential vendors can meet the necessary regulatory requirements, such as data privacy, security and compliance. Any failure of a third-party vendor to comply with these regulations can have serious consequences for the organization, including fines, reputational damage, and legal liability. Firms need to evaluate and select vendors that can meet these regulatory requirements and have robust controls in place to monitor and manage their performance.

Darlington Building Society classes us as a critical third-party, adding that;

“Any suppliers that supply technology that underpin your important business services are also classed as a critical partner under the third-party management regime. So even if AccessPay aren’t classed as a one from an outsourcing point of view we must include you because you underpin our payments infrastructure”

Our provisions around SLA’s and the fact we are EBA compliant also aligned to their regulatory requirements, and “reduced the people risk element within the operations, which was a critical factor” as to why they chose to work with us.

You can read the full story here.


Eliminate people risk with third-party payment controls

When it comes to payment controls, organizations with manual processes tend to have a difficult time ensuring that there are robust and standardized controls in place too. And keeping track of your audits trails can also be challenging. This is because manual processes often involve multiple systems and processes across numerous individuals, which once again opens the process up to unnecessary risk.

Organizations now need to assess their current payment submission process and payment controls too. This includes identifying the checks that are in place on a payment file, additional security measures to prevent unauthorized access, and controls to ensure that only authorized personnel can make changes to the payment file. It’s also important to ensure staff are equipped to carry out these processes remotely in the event of a crisis. A third-party platform provides an automated connection between back-office systems and the banks as well as a user interface that is specifically designed for regulated businesses.

These platforms include features like multi-factor authentication (MFA), configurable approval workflows, modulus checks, and the ability to check files for suspicious or duplicate transactions. Additionally, it allows for segregation of duties and privilege management based on roles within the business, as well as easily being able to pull of audit trail reports so the whole process is tracked seamlessly within the platform.

By using such a third-party platform, organizations can ensure that they have adequate, automated controls in place which reduces the risk of errors and fraudulent activity across their entire payments infrastructure.

Read more about the advantages of working with a third –party for bank connectivity.


Stay audit ready with automated processes and reporting

When mapping out an audit process where human intervention is involved this can quickly become complicated when looking at how people, process and technology fits together. It can be particularly time-consuming when considering a disaster recovery plan for each use case where a person is involved in the process. With automated technology we are able to map workflows that align to business processes to match their own internal approval processes. This means it’s much easier for businesses to highlight and resolve any risks when working third-party platform.

Generating relevant reports that provide adequate evidence for audits is often a problem too, especially when an organization has a manual payment submission process. Why? Because manual reports are generated using excel or other similar manual methods. This can make it difficult for organizations to ensure they have a complete and accurate record of their transactions, which can also be a challenge for internal compliance.

Additionally, firms can benefit from real-time cash visibility, making it easier for organizations to comply with compliance initiatives. We recently worked with Sainsbury’s bank to automate their PRA reports, removing the need for manual intervention and they could trust their reports arrived on time, and were compliant with PRA’s regulatory standards.

No matter where you are on your current Operational Resilience journey, AccessPay can help you automate, control and secure your finance function to create a more risk-averse finance team.

Find out more about how we can help you here.

Or, check out our FTU on Operational Resilience below:


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