By Vox Regulatory Analyst John Aitken
Adaptability and innovation are critical for businesses to remain competitive and to thrive in a complex and evolving regulatory environment. With an ever-expanding list of regulations to adhere to, financial services firms must undertake periodic repapering exercises to produce documentation that is compliant and meets client expectations and shifting rules. This is a difficult and complex task.
Traditionally, repapering exercises have been done manually, requiring an enormous amount of time and manpower to complete each project. Many in the industry (us included!) believe it’s time to re-evaluate this outdated approach and find creative, modern solutions to meet the challenges of a varied regulatory landscape. One essential approach is increased automation, allowing for the more labour-intensive tasks to be efficiently streamlined by custom-built software. Employees can then focus on the crucial tasks that require human agency.
Here are the four most serious drawbacks of a manual repapering approach in financial services and how automation can address these challenges:
Time & Resource Cost
Arguably the biggest challenge of manual repapering exercises is the time spent on the slow process of ensuring all documentation is compliant and conveys the correct data – and that time translates to money.
Increasing automation with end-to-end software programs helps significantly streamline this process by saving both time and effort on the documentation generation, editing, and review stages. This has the dual benefit of decreasing the workload for staff, so they can focus on the most difficult elements of the process, and producing results more rapidly for clients.
Format Inconsistencies and Errors of Omission
Updating client documentation is a vital legal and reputational exercise for every firm. Existing practices of manually reviewing documents page by page or using imprecise search features (like the Ctrl+F search function) run the risk of allowing certain data segments to escape review or even simple grammatical mistakes to go unnoticed due to human error, and requires trained staff to avoid mistakes. Even modern AI-based tools can’t provide complete certainty and require oversight to review the output and manage exceptions.
Automation software, such as Vox’s Opal, eliminates the risk of inconsistencies and errors in three ways. First, it ensures the correctness and consistency of documentation by using pre-approved document templates. Next, it eliminates manual data entry by integrating directly with enterprise data stores or loading spreadsheet data exports. Finally, in many automation software platforms, key business data points are stored in a database allowing for subsequent data extraction, automated reconciliation, and review without having to manually refer back to the source document.
With automation software taking these issues off the table, project teams can focus on higher-value tasks including client communication and exception management.
Initial Margin, IBOR, Brexit, SFTR, and SEPA 2 are just a few of the regulatory reforms requiring critical, and complex, repapering exercises. Significant reputational damage can occur in manual repapering exercises when mistakes are made due to human error—from including incorrect or outdated information to omitting critical sections.
Organizations need to guard against such mistakes by hiring specialist staff and conducting “four-eyes” reviews of all documents – but comprehensive automation software platforms eliminate these manually-driven operational and reputational risks, allowing management to focus on other critical areas of the business.
Manual repapering has been the go-to approach for repapering for decades. Getting stuck with a particular approach to any problem, especially one as complex as regulatory reform, prevents innovation and inevitably leads to stagnation as an outcome.
A manual process does work – with risks and issues as outlined above – but the next time a document needs to be repapered, it’s too easy to take the manual approach again. Taking an automated approach helps with current efforts, but it pays off even more through time.
How? Well, the next repapering effort can re-use the structured business data output from the previous effort – update the language in the templates and automatically re-generate the new sets of documents.
Additionally, the digital-first approach can become part of the “business-as-usual” process for a firm. After all, if you can “re-paper” a document, you can “paper” it. The workflow might be different but the tools and templates should be the same. Our document automation software, Opal, is a modern, easy-to-use platform that streamlines the production of complex documents. We built the platform to address the manual reporting issues I’ve outlined in this article and that we see regularly across the industry—from enormous time and resource costs to manual errors and reputational risk. The software allows for the rapid generation of documentation using standardised templates, efficient storage, and thoroughly tested automation features. Opal saves repapering teams both time and effort and is an excellent tool for navigating an increasingly complex regulatory landscape. You can learn more here.