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How Automation Supports Disclosure Management and Compliance for BNPLs

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Ramping up to ready themselves for the likelihood of new regulatory rules around disclosures, Buy Now, Pay Later financial service companies should begin stepping up their efforts to understand the steep hill ahead. That is the clarion call coming from technology companies, like Naehas, who have successfully helped finserv martech teams manage compliance programs.

As noted in the first blog in the BNPL series,”Regulatory Compliance and “Buy Now, Pay Later” Firms: What’s the Latest,” regulatory readiness is key.

While complex, regulatory compliance is benefitting from Artificial-Intelligence (AI) powered platform technology that addresses and alleviates the most vexing challenges. Considering that the Consumer Financial Protection Bureau (CFPB) has called for a handful of agencies to submit information, industry consensus is that the government is preparing to develop new rules for these as-yet regulated entities. Preparation and partnerships that bring platform solutions will prove critical cogs in the wheel of full compliance moving forward,” according to Brent Plow, National Director at Neahas.

Managing Risk

In a December 16 notice, the Consumer Financial Protection Bureau (CFPB) reported it is turning its attention to this as-yet unregulated segment. “ Consumer Financial Protection Bureau Opens Inquiry into “Buy Now, Pay Later” Credit
https://www.consumerfinance.gov/about-us/newsroom/consumer-financial-protection-bureau-opens-inquiry-into-buy-now-pay-later-credit/

The CFPB identified specific areas on their radar: “The CFPB is concerned about accumulating debt, regulatory arbitrage, and data harvesting in a consumer credit market already quickly changing with technology.”

“Buy now, pay later is the new version of the old layaway plan, but with modern, faster twists where the consumer gets the product immediately but gets the debt immediately too,” said CFPB Director Rohit Chopra. The Director added that the order for five specific companies to submit information is so that the agency “can report to the public about industry practices and risks.”

Those comments are Instructive for those needing to ready their regulatory compliance efforts. Among the CFPB’s top concerns: how credit scores may be impacted, from installment payments, credit cards with interest-free or low-interest, interest rates, installment loans, payment methods, whether customers can pay on time, and how these short term gains impact consumer’s bank accounts and credit scores long term.

“There should be no delay in Buy Now, Pay Later firms working to build or bolster their regulatory compliance readiness,” according to Plow. He added, “The more prepared they are to manage the complexities of disclosure management, and the more they understand the value of automation and AI platforms to meet those compliance regulations, the more competitive they will be moving forward.” Having served as a resource for financial service firms of all types, Plow sees the role of innovators as both resourceful and relevant to this segment in 2022.

Regulatory Impact and Use Cases

The regulations for BNPL firms will likely impact four common use cases:

  • Marketing disclosures
  • Customer agreements
  • Regulated content
  • Welcome kits

Addressing Key Pain Points

Companies facing the expected emergence of regulations can find a range of resourceful technology tools to ensure their compliance journey’s success. Plow and his teams at Naehas have worked with Top 5 U.S. banks to provide a customer experience platform built specifically for financial services. This includes a complete Marketing Compliance platform for Disclosure and Offer Management, along with Document Compliance.

Disclosure management requires a laser focus on 5 key issues:

  1. Risk management
  2. Auditability and Traceability
  3. Speed-to-market
  4. Scale efficiency
  5. Innovation

Addressing each of those priorities brings a focus on Artificial Intelligence-powered technology. Popular among top banks and wealth management institutions, AI platforms ensure disclosures and regulatory content are accurate, compliant and auditable.

By utilizing AI, the entire workflow is streamlined, generating multiple and meaningful efficiencies:

  • Enhanced and Increased Personalization
  • Better Customer Experience/Retention
  • Higher Top Line Growth
  • Reduced Costs
  • Expedited Time to Market

Consistency across the entire enterprise is critical, saving time, manpower and costs.

The Why Behind AI in Regulatory Compliance

Intelligent reviews of marketing collateral and regulated content, made possible with Artificial Intelligence-powered platform technology, is a primary motivation for financial service marketers to adopt this valuable tool. More information on the Naehas Intelligent Review solution can be found here (INSERT LINK), and offers resourceful actionable insights for BNPL firms.

Naehas has collaborated with top financial services firms to provide secure, innovative, collaborative solutions.

  • An Artificial Intelligence (AI) powered engine purposely-built to achieve compliance for financial service institutions in an increasingly complex and regulated industry.
  • A leading industry cloud which ensures disclosures and regulated content are accurate, compliant and auditable.
  • A platform which automatically creates, manages and delivers disclosures for all products and channels.

Serving as a valuable resource to those companies in highly-regulated industries is nothing new to Naehas. We’ve created partnerships with some of the most widely-recognized top national banking institutions, leading wealth management firms, and insurance companies. While each case, and each solution, is unique, so, too, are the purposely-built AI-powered platform tools we offer to match the need. It’s why we have established a robust resource center (conveniently located on our website’s home page) filled with useful eBooks, case studies, infographics, solution briefs and blogs that address the wide range of challenges marketing technology, operations and execution teams regularly face.

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