Delivering Regulatory Compliance Quickly and Cost Effectively

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Delivering Regulatory Compliance Quickly and Cost Effectively

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A 2017 survey reported that compliance costs for financial institutions are expected to double by 2022. While most regulatory changes are announced with compliance-by date, which provides adequate time for making the changes, it is always a challenge for banks and other financial services companies to ensure compliance. The reasons include lack of understanding of the impact of changes, the complexity of making the required changes in legacy technology platforms, the frequent incapability of technology solution providers to roll out the required fixes in time and a lack of adequate planning of the transition.


In a recent example, Saudi Arabian Monetary Authority (SAMA), which is the central bank of Kingdom of Saudi Arabia (KSA), notified changes in the Debt Burden Ratio (DBR) calculation by banks in the region for salary based lending and average balance based lending as applicable to personal loans, credit cards and mortgages finance. All the banks in KSA were asked to comply with these regulatory requirements with immediate effect. To underscore the importance of this change, SAMA instructed the banks to ensure that new customer on-boarding was aligned to the revised guidelines. The changes specified new limits of credit obligations for loan products as a percentage of individual’s income that need to be adhered to while extending any new credit to retail individuals.


Clearly, freezing banks’ ability to issue new loans till they ensured compliance, brought with it significant business impacts, and hence complying with these changes became a top priority for banks. However, for a leading bank in KSA, using Nucleus Software’s FinnOne Neo lending solution, ensuring compliance was very easy and cost effective. The Bank was amongst the very few lenders in the region to announce compliance with new rules almost immediately without any significant business impact. With more than 3 decades of experience of working with banks all over the world, Nucleus Software designed FinnOne Neo to handle these kinds of situations. The solution’s advanced technology provides the flexibility to conform rapidly to evolving  business and regulatory requirements. FinnOne Neo’s flexible and robust rule engine ensures that changes such as these can be made quickly and easily in the system. In fact, the solution’s design ensures that the changes can be implemented without complex, time consuming and costly software development. The solution’s innovative design ensures that changes can be made by the bank staff rather than forcing the bank to turn to an external software developer. Also, as these thresholds are not hard-coded in the system, future changes can be incorporated very quickly and easily. There are many such examples of other banking customers using Nucleus Software’s lending platform in other parts of the globe. One of the key reasons for this trend is the unique way in which the platform has been designed, keeping the end user’s business preferences in mind.


The Bank in KSA is using Nucleus Software’s FinnOne Neo Customer Acquisition for its lending business. FinnOne Neo helped the Bank automate and digitize the processes involved in loan origination to enhance growth, streamline operations, eliminate manual errors and reduce credit risk. The solution has enhanced credit decision making while automating underwriting and verification functions. FinnOne Neo’s powerful engines covering areas such as rules, policies, fees and charges have ensured that the Bank can tailor the system quickly and easily to match their evolving business requirements. With FinnOne Neo, the Bank can create and launch new loan products in a matter of minutes using pre-defined rules, policies, pre-configured masters, dynamic forms and configurable workflows.


The strength, effectiveness and usability of any technology solution can be significantly enhanced with its flexibility and adaptability. Hence, while evaluating technology for mission critical areas, it is important for financial institutions to consider proven performance in agility to regulatory compliance as one of the decision making criteria.

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About the Author

Nitin Garg, Associate Vice President, Global Marketing, Nucleus Software

Nitin Garg is the Associate Vice President, Global Marketing at Nucleus Software where he is responsible for driving strategic marketing initiatives to support Nucleus in digital transformation of the Retail and Corporate Banking segment. He carries a deep passion for technology based innovation and enjoys being an enabler for realization of its true worth across the entire financial services industry value chain. Nitin brings over 16 years’ experience covering marketing, business development, delivery management and technical operations across diverse industries. His key focus areas include customer success, brand perception and technology leadership. Nitin has a Post Graduate Diploma in Management from IIM Calcutta and Bachelor’s Degree in Marine Engineering.

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About Nucleus

At Nucleus Software we are committed to providing efficient, modern yet proven software solutions for the global Banking and Financial Service industry. We have been pioneers in developing Retail Banking Software, Corporate Banking Solutions, Transaction Banking, Cash Management and Internet Banking Software since 1986. Our success spreads across more than 50 countries, and we serve our customers globally through our direct and partner operations across US, Europe, Asia-Pacific, Africa and the Middle East. We are known for our world-class expertise and innovation in lending and transaction banking technology. Our two flagship products, built on the latest technology are: FinnOne™ and FinnAxia™.