3 hidden time and cost suckers found in every AML tech stack

Whether you’re looking for cost savings in your current AML tech stack or purchasing new software, time and cost suckers are everywhere. 

From false economies to hidden fees, sunk costs to lock-in contracts, the savvy compliance professional needs to be on high alert in order to meet compliance requirements without blowing the budget.

If you believe the likes of PwC, Gartner, Bain and ilk, the way to operational efficiency is through standardised processes, IT system consolidation and aggressive automation.

1. A false economy.

The cheapest option almost always requires data integration software or manual work.

You’ve got great recommendations, searched comparison sites and chosen a solution that fits the budget. But… upon purchase you find that it doesn’t easily integrate with your other software tools. “Easily” is the key term here. It may be easy for a developer, but not a compliance officer.

You have three choices: a. request an IT integration project, b. manually move the data between systems, or c. use a third-party data integration tool.

This is one of the most common hidden costs in AML processes, let’s look at them in detail.

a. IT dev time

Everyone wants a piece of the IT department, but they’re stretched thin. According to Gartner, the top 10 strategic IT trends for 2023 are focused on optimising businesses for resilience, scalability and pioneering new ways of engaging and expanding employee and customer connections, all while being sustainable. Based on the lack of resources and these strategic priorities, you’ll probably find your IT ticket request for the integration of a tool used by a small portion of your company pushed to the bottom of the pile.  

If it does get air time, keep in mind that you’ll want all your compliance tools integrated. More integrations mean more dev time. What seems like a quick process could easily blow out. 

b. Manual processing

Moving data manually between systems is a popular choice for small or budget-conscious companies. While the perceived cost is low, it actually results in:

• High rework rates / lower quality due to errors 
• High headcount / additional labour costs
• Reduced productivity
• Missed business opportunities
• Non-compliance

Based on research conducted across First AML’s global client base (pre purchase) we found the average compliance specialist processes approximately 30 complex KYC cases per month. Post purchase, the teams using the First AML platform, which, in a single platform combines multiple tools, data sources and optimises for workflow, compliance analysts process 200 complex KYC cases per month.

c. Data integration software

Finally we have integration software, such as Zapier or Jitterbit. These systems are easy to use, often provide ‘no code’ installation and are quick to deploy. But, they charge both a monthly subscription fee and a ‘per data transfer’ unit price. Whilst they can provide a valuable functionality in bridging the data gap between disparate systems, the costs can add up, especially for companies with high data transfer requirements.

Don’t forget the upkeep

Integrations aren’t ‘set and forget.’ Software upgrades, planned outages and failures all happen and need to be managed. Additionally, if your processes or information requirements change, that’ll require additional time and money to address.

2. Vendor sprawl

In the pursuit of AML efficiency and a fear of increasingly tough regulatory fines, most compliance teams now subscribe to EIV tools, PEP and sanction screening, data storage and don’t forget the numerous company registers needed to verify non-individual entities. 

As the sprawl of new tech tools expands unused ‘seats’, redundant functionality and duplicate features also worsen but are hidden by the chaos.

What seemed like a small monthly cost for one system soon explodes and before you know it, your budget is blown thanks to a thousand small subscriptions.  

Not only does vendor sprawl suck up actual money, it also sucks significant time and effort from both the compliance and IT teams.

It’s always good practice to take stock of annual subscriptions, it’s also prudent given the current economic uncertainty and geopolitical disruption.

3. Training and redundancy

Another hidden time sink caused by diverse tech stacks is training. Not only in how to use each piece of software but also the correct policies and procedures associated with them. The bigger the team, the more important it is for formal training to ensure knowledge is shared and a standard approach to AML is taken. This time spent on training and retraining on systems could be better used for higher value compliance tasks.

Additionally, a common mistake businesses make is relying on just a few individuals for specialised knowledge or software use. This presents both a risk and liability in the event of these individuals leaving the business.

The bottom line

When it comes to AML processes, hidden costs can significantly impact your budget and productivity. By proactively addressing these hidden cost and time suckers, you can optimise your AML efforts and reduce unnecessary expenses. Streamlining your tech stack, investing in user-friendly and integrated AML solutions, and fostering knowledge sharing will lead to a more efficient and cost-effective AML process for your organisation. Remember, the real value lies not just in the software itself but also in its compatibility, ease of use, and the overall cost of ownership.