Bringing “Tribal Knowledge” into the Digital Banking Age

For many, the term “tribal knowledge” invokes a definition of historic and sometimes secretive knowledge passed through generations. While that notion may no longer be commonplace in our communities, the concept is still very much alive and necessary for banking leaders. “Tribal knowledge,” as it relates to the financial industry, is a cherished and often differentiation-inspiring culture that demands employees provide each other with in-person support to pass down generations of business knowledge. Now that social distancing guidelines are well in-place because of the COVID-19 pandemic and conversations around the long-term status of remote working policies are underway, banks have been forced to transform themselves at an unprecedented pace. This has left the financial services industry asking itself if and how the tribal knowledge of its employees will survive.

Maintaining tribal knowledge in a heavily digitalized future

Historically, financial institutions have been slow to adopt automation technologies and back-end digital processes. For decades client lifecycle management (CLM) and know your customer (KYC) regulatory processes were largely handled manually. Both are critical to anti-money laundering (AML) efforts for verifying each customer's identity and assessing their credentials before onboarding them through the loan process.

The tribal knowledge that protects institutions takes years to acquire. Because regulations continually change, banking professionals constantly need to keep up. Today, dispersed workforces mean inexperienced employees can no longer rely on the in-person guidance of seasoned industry analysts to reduce the amount of “bad money” leaking into the system. Employees are physically apart, which impedes the knowledge transfer that used to happen organically. This pandemic has underscored the need for an alternative way to share critical tribal knowledge with remote employees.

Operations can remain productive in a dispersed working environment

Since COVID-19 hit, industry reports show that suspicious activity has spiked. Not only are banks dealing with exponentially higher volumes of requests under greater pressure, but “bad actors” are getting smarter on money laundering schemes and smaller loans are becoming harder to catch through normal channels. For instance, when the Payroll Protection Plan (PPP) was rolled out to those in need last spring — banks stepped up to expedite billions of dollars for small business loans. Every week the needs escalated exponentially which made it challenging to keep up with the demand. Many financial institutions rushed through the manual process to deliver the loans, and some questionable loans slipped through the cracks.

In today’s distributed world a digitized tribal knowledge resource can aggregate the complex regulatory requirements that support AML. These rules and regulations cannot only fill a two-inch binder, but they vary from region to region, per product, and by situation, and are constantly being updated. Financial institutions that are non-compliant have been fined roughly $30-40 billion over the last five years, which is a significant hit to any institution’s bottom line. These losses can be minimized if banks find ways to crush complex processes and encapsulate the tribal knowledge analysts need to do their jobs in today’s virtual world.

Automating the information gathering process

Banks need to protect their institutions by implementing systems with automated data-driven rules so remote workers can seamlessly execute customer onboarding, background checks, and expedite loan agreements. Onboarding a customer includes assessing their creditworthiness, performing due diligence, and monitoring the account activity and deposits for suspicious activity or any red flags once it’s been established. If financial institutions start with a solid rules-based system that includes the latest regulations at the beginning of each transaction, workers can continue to interface with legacy processing systems, minimize error, and be more efficient. A small set of experts can maintain the rules and modify them based on emerging regulations so everyone — no matter where they are working — can benefit.

Digital solutions allow loan officers to retrieve critical information on the spot. They can view customer FICO® scores, know immediately what other loans that customer might have, and what their risk might be, minimizing risk to the bank. Digital tools allow loan officers to expedite the process on multiple interfaces, including their mobile phone. With guidelines built right into the system, accuracy and efficiency dramatically improves.

There will always be bad actors out there who are trying to outsmart financial institutions and disguise illegally obtained funds as legitimate income. But with automated tools that capture critical tribal knowledge, it’s much easier to prevent a bank from aiding in money-laundering or compromising its integrity.

By Alex Dixon, Global Head of Client Lifecycle Management & KYC at Pegasystems