3 Reasons Why Your Product and Compliance Integration is Costing You Money

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April 18, 2016

Why failing to link product development with compliance is costing you more than you think.

 

Cost inefficiencies and value destroying activity are often the result of a cumulative series of events across multiple departments, according to a report by VISA and Stanford University. Frequently, a merchant acquiring organization is exposed to such risks through the continued use of legacy systems. To remove friction from the overarching organizational goal, it’s necessary to improve information flow and data management.

 

To this end, product managers and compliance professionals can work together in specific strategic areas, resulting in process and profit margin improvement across the merchant acquiring organization. This article will discuss the common areas of friction identified during our work with payment processors.

 

  1. Sub-optimal process flows create conflict

Material, information, and financial data flows in both directions at a payment processor. A standard process flow for a merchant acquirer begins with the sign-up and underwriting of a merchant, followed by the processing of transactions for accepted merchants and routing of issuer funds back to the merchant. Incomplete or inaccurate information delays many applications at the underwriting stage. Legacy systems can further contribute to inefficiencies when information is requested on multiple occasions. Undertaking a multi-department data audit can be a useful starting point for understanding where the most friction lies in your process.

 

  1. New regulations also mean system updates

When evolving regulations also require system updates, opportunity for strategic action is reduced. Keeping compliance systems up to date can be a slow process if IT experts are required to manually make changes. But compliance doesn’t have to be a burden on organizational efficiency. In fact, compliance regulations can introduce opportunities for collaboratoin. We cover how compliance can add value rather than increasing overhead here. Such activity might include the creation of a histogram of client distribution that provides a focus for product development on lucrative segments. For example, via a visual representation that displays merchant distribution alongside the acquirer risk profile.

 

  1. Continuous improvement gets stalled

 

Compliance and product development should form part of a continuous information cycle. The advantages created by a risk metrics dashboard include realignment of product focus prior to rollout. It is important not to waste the opportunities identified by improved business intelligence. For example, care must be taken not to introduce friction and damage new business relationships during the critical first impressions stage. This process must allow product refinement and early identification of trends in an actionable manner. The result will be increased input into the design stage and a contribution to great customer experience from swift underwriting. Combined with improved strategic insight on optimal merchant portfolio, relevant targets and goals can be aligned across several parts of a merchant acquiring organization.

 

Conclusion

 

The many different aspects of a merchant acquiring organization must work together or new product integrations will end up costing you more than you realize. Failing to integrate new products with compliance processes will result in sub-optimal data flow, confusion with legacy systems, and disruption to the continuous improvement cycle.