Risk Orchestration:
Dispelling the Myths – Hub Platforms vs True Orchestration
Differentiating between Risk Orchestration platforms
In today's complex financial landscape, combatting financial crime and fraud is a paramount concern for lenders of all sizes. Risk orchestration platforms have emerged as a powerful tool in this endeavour, promising a holistic approach to risk management.
However, it's crucial to distinguish between hub platforms and genuine orchestration platforms, as their capabilities differ significantly. In this article we help you differentiate between the two so you can make the best decision for your business.
Hub Platforms:
Centralisation without orchestration
True Orchestration:
A symphony of data and workflows
Why is true orchestration important?
Lenders are constantly challenged by a multitude of risks. These risks can stem from fraud, money laundering, financial crime, and other malicious activities. To effectively mitigate these risks, lenders require a robust risk management strategy.
Traditionally, risk management has been a siloed process, with different departments managing different types of risks. This fragmented approach can lead to inefficiencies and inconsistencies. For instance, a customer flagged for suspicious activity on one platform may not be flagged on another. This can create gaps in a lenders’ risk defences.
Hub platforms have emerged as a solution to address the shortcomings of siloed risk management. These platforms centralise data and outputs from various risk systems, providing a consolidated view of a customer's risk profile.
However, hub platforms have limitations. They do not synchronise workflows across different risk systems. This means that even though data is centralised, the processes for managing risk remain fragmented.
True orchestration platforms go beyond mere data centralisation. They orchestrate workflows across different risk systems, creating a unified and synchronised approach to risk management. This enables lenders to:
Gain a holistic view of customer risk
Improve efficiency and decision-making
Enhance regulatory compliance
Reduce costs
The True Cost of Financial Crime Compliance
Is the UK financial services sector doing enough of the right things to effectively fight financial crime?
Unlocking cost savings through true orchestration
A recent LexisNexis® Risk Solutions study revealed a staggering cost of compliance for UK financial institutions – exceeding £30 billion annually. This translates to an average of £194 million per firm, solely on personnel and technology required to meet existing regulations.
Fortunately, effective orchestration of compliance processes presents a significant opportunity to improve a lenders bottom line. Consider this: even a modest 5% increase in compliance efficiency through true orchestration (assuming direct cost savings) would easily outweigh the initial investment in a platform. For example, a challenger back onboarding circa 100,000 customers per year who had 6 point solutions and was seeking to assess the cost of building in-house versus orchestration over 3 years found the estimated cost of procurement, setup, and running the platform for the first three years sits around £2 million.
These figures emphasise the critical need for all firms to identify efficiency gains throughout the customer lifecycle. Orchestration, as a strategic approach, empowers you to achieve these gains.
A true Risk Orchestration platform
True orchestration offers a significant leap forward in risk management compared to traditional siloed approaches. By synchronising data and workflows, true orchestration platforms empower financial institutions to gain a holistic view of customer risk, improve efficiency, make better decisions, and achieve regulatory compliance.
As financial institutions grapple with an increasingly complex risk landscape, true orchestration platforms are poised to become an essential tool for effective risk management, so lenders can achieve a more streamlined, efficient, and cost-effective approach to combating financial crime and fraud.
LexisNexis® RiskNarrative®
Orchestration platform providing a highly sophisticated, configurable and accessible financial crime lifecycle management solution.
