BFSI Industry Overview
The Financial services sector is comprised of a diverse range of industries including banks, venture capital firms, insurance companies, real estate firms, brokers, financial institutions, private equity and money markets—all of which help keep businesses across sectors functioning smoothly every day. Transactions in this sector are primarily structured and controlled through contracts and are governed by external and ever-changing state and federal regulations. The sheer volume and complexity of contracts has made it critical for the BFSI industry to adopt and adapt to the advanced, Artificial Intelligence (AI) driven, contract management solutions. The BFSI industry can now realize significant steps of improvements by leveraging AI to streamline Contract Life Cycle Management (CLM) to reduce risks, increase revenue, improve compliance, and gain deep insight into contractual obligations and milestones.
In the banking industry, contracts govern every dollar that comes in and goes out of the organization. Banks are segregated into retail, wholesale, and investment banking with each one providing a unique set of services to its clients. For all banks, contracts are fundamental to risk management and regulatory compliance as they provide multi-layered visibility into every aspect of an organization’s operations. With the increasing regulatory scrutiny and growing number of regulations governing the business interactions in Banking industry such as the PATRIOT Act, regulations by Office of the Superintendent of Financial Institutions (OSFI), IFRS 16, ASC 606 and Bank Secrecy Act (BSA) / Anti-Money Laundering Law (AML) etc., effective contract management is not merely an operational necessity, but the very foundation of data protection, consumer service, and ethical values of the organizations.
Similarly, an insurance provider offers risk management and mitigation for life, P&C, and health in the form of insurance contracts. The contracts provide payments for an uncertain, or potential future event in exchange for regular premium payment, defined in a legally binding contract. The governing and oversight of the insurance industry is usually split between the states and the federal governments with every state having its own unique set of regulations, thus complicating the compliance obligations for legal operations and contract management professionals.
Contract Management Challenges faced by BFSI industry
High-risk, high-value contracts (with brokers, consultants, advisors, and customers) necessitating fine-print review
Industry, state, and fiduciary compliances relating to Consumer Financial Protection Bureau (CFPB), Bank Secrecy Act (BSA), Know Your Customer (KYC), ASC 606 (Revenue Recognition), IFRS 16 (Lease Obligations) etc.
High need for data security owing to sensitive customer data and increased privacy regulations.
Strict internal & external audit guidelines demanding all-time availability of audit-ready records.
Poor contract visibility due to absence of centralized, digital storage across geographies and departments.
Millions of existing contracts often need to be updated or amended during their lifecycle, such as changes to regulatory obligations. For example; the fairly recent U.S. Federal Reserve decision to prefer the Secured Overnight Financing Rate (SOFR) as the alternative rate system to the previous, long standing London Interbank Offered Rate (LIBOR). The change was a vitally important and potentially disruptive regulatory change representing a high level of risk, potential litigation, and financial burdens to companies in the BFSI industry.
Ultria CLM for Banking, Financial Services & Insurance industry
Ultria CLM – Enterprise Contract Management Software for Banking, Financial Services, & Insurance industry enables organizations to streamline all contracting processes, reduce risks, and design a better compliance management framework:
AI-powered contract authoring, Robotic Process Automation (RPA) and condition-based approval workflows for faster contract turn around.
Pre-approved templates and clause library with hints to ensure inclusion of all necessary clauses.
SOC2 Type 2 certified technology architecture with secure access controls configurable by role or other parameters.
Auto-tracking of versions throughout review & negotiation for accurate audit trail.
A centralized contract repository for all legacy and on-going contracts with advanced search options.
An updated, smart clause library to automatically identify all redundant clauses and update them with any updated/new clauses and regulations.
These benefits are just the tip of the iceberg.
To learn more about how Ultria Contract Management for Financial Services can help your organization, you can engage with us.