Banking and financial services companies need insight into their contracts, now more than ever.
Facing the combined headwinds of economic uncertainty, evolving customer expectations, and changing regulations, banks and financial services companies are under increased pressure from both competitive and compliance perspectives.
Yet while digital transformation is changing the face of business, contracts are often being left behind. Data suggests this is having a serious impact on an organization’s profitability and risk management. World Commerce & Contracting, a research organization, estimates that, on average, companies miss 5-7% of a contract’s value due to mismanagement. This amount of leakage is unacceptable in today’s competitive business environment.
Financial institutions must be fully aware of what is in their contracts to leverage maximum advantage from their agreements. With the help of contract intelligence solutions , they can do just that.
Contract intelligence is the process of digitizing, structuring and connecting contract data, using emerging solutions like artificial intelligence, native language processing, and enterprise integrations. With contract intelligence, financial service can ensure the intent of every business relationship is correctly memorialized in the contract and fully realized in operations. This accelerates revenue, decreases costs, improves compliance, and reduces risk.
But contract intelligence doesn’t happen overnight—companies should approach the implementation of contract intelligence solutions in four key stages: digitize, analyze, connect, and realize. Let’s walk through each one to understand how it impacts the banking and financial services industries and the journey toward contract intelligence.
Contract intelligence starts with digitizing contracts so digital systems can understand them. Financial services should be discerning when it comes to how different contract management solutions define “digitization.” Simply turning hard copies into PDFs in a cloud keeps their data locked in the document. More mature solutions can tag and “read” documents, turning contracts into raw data that can be integrated with systems and enable deep, enterprise analysis at scale.
It is through analysis that contract intelligence leverages the content of contracts to manage risk and identify advantages. As the single source of truth for all commercial and regulatory commitments between banks and third-parties, contracts can be analyzed to surface unprecedented insights into risks and opportunities. This might include clause discovery exercises, identifying potential breaches to new sanctions, exposure to market risks, or exposure to defaults or credit rating changes.
Contract intelligence allows for digitized contract data to be used across the enterprise, integrating contract data into critical systems and operations that power the business. Contract intelligence allows contracts to be broken down into their component parts, then integrated into other systems. For example, compliance offers can extract regulatory obligations at scale from across a contract portfolio, then monitor, in real time, fulfillment of those obligations within their own systems. Contract data is broken out of silos for greater insight and outcomes.
With contract intelligence you can realize the full value of each and every contract. Ultimately, contract intelligence empowers financial services to ensure the intent of every contract is fully realized by providing the AI-powered visibility and control these organizations need. This means full compliance and full value capture across the enterprise. Given that, on average, according to World Commerce & Contracting, 9.2% of a contract’s value is leaked due to non-compliance, contract intelligence can have a real impact on a company’s bottom line.
Digitizing contracts is the critical first step toward contract intelligence, but too many organizations stop there. In doing so, they neglect the benefits available from fully analyzed contract data.
That’s where contract intelligence for financial services and banking comes in and it is why financial services organizations must prepare themselves now to take advantage of this digital transformation, rather than waiting until it’s too late.
The building blocks of contract intelligence – digitize, analyze, connect, and realize – are each fundamental to the next and when combined and followed they layout the roadmap for successful contract intelligence.
To learn more, download a free copy of our eBook:Contract Intelligence for Banking and Finance: Drive Compliance and Speed with Structured and Connected Contract Data.
Jim Burnick is senior director of banking, financial services, and insurance solutions for Icertis.