Start Small … and Scale™ — Because You Can in the Cloud

Best-Practices and Compliance Don’t Have to Involve Big IT Budgets

kloudtrack® Case Study Overview

Technologies and Services:  

SaaS | Cloud platform for data and process management

Solution Services related to Governance, Risk and Compliance (GRC)

kloudtrack® Modules: 

kloudflow

kloudfile

kloudexchange™

Industry:

Financial Services

(GRC) Governance, Risk Mitigation, Compliance

Organization(s): 

Lincoln Financial Network/Lincoln Securities Corporation

stop | think | go | kloud 

ROI Benchmarks in Financial Services are Proving the Value of SaaS|Cloud for Data Management, Workflow, Archiving/Retrieval, GRC, Supervisory Processes and Best-Practice Management

The emergence of sophisticated Cloud 2.0™ Software-as-a-Service and Cloud Computing (SaaS | Cloud) platforms is allowing enterprise management teams to quickly and efficiently deploy applications and capabilities that were traditionally only available from a “big iron” provider and at price levels that usually start in the 6-figure range per year.

Two operational areas that are at the center of this market evolution are compliance and risk management. With all the buzz about SaaS and the ROI benefits, we wanted to pause for a moment and take a closer look at an example of how this type of technology is directly benefiting owners/principals, CCOs, COOs, compliance and legal teams as well as IT professionals in specific market sectors.

This ROI Benchmark Case Study comes out of the Financial Services industry – the securities broker-dealer community to be exact – and relates directly to the use of SaaS platforms in instances of regulatory audit.

Compliance, Risk Mitigation and Audit Response Fertile Ground for SaaS Technology ROI

This kloudtrack® ROI Benchmark Case Study comes out of the Financial Services sector; however, the business issues – business process management, document archiving/retrieval, workflow, compliance, risk mitigation and best-practices –are exactly the same for just about any industry segment.

At the time of the study, Alan Pransky was a producing representative and registered principal for Patriot Financial. With offices located throughout New England, Patriot is one of the fastest-growing regional financial management firms in the region.  In addition to operating multiple branch offices throughout the greater-Boston area, Patriot also serves as an Office of Supervisory Jurisdiction (OSJ) for broker-dealer Lincoln Securities Corporation (LSC).

As is usual for branch offices of large independent broker-dealers (IBDs), Patriot is regularly reviewed by broker-dealer “home office” compliance officers and is also required to adhere to regulations and guidelines of the Financial Industry Regulatory Authority (FINRA, formerly NASD), state regulators and the Securities Exchange Commission (SEC).

When regulators request information, Alan and his team members have 24 hours to research and acquire the necessary information and then transmit it to the home office. Since these requests are always unexpected they cannot be budgeted for and, as such, require additional costs to the office and the individual.

Over the past 2 years, Patriot and the broker-dealer’s home office corporate compliance and IT teams reviewed and approved various solutions, including kloudtrack® SaaS|Cloud technologies, for use at their branch and OSJ offices for books and records maintenance, written supervisory procedures (WSPs), compliance, risk mitigation and to assist with ensuring best-practices related t0 business process management (BPM).

Shortly after this corporate approval, Patriot deployed the two primary kloudtrack® Modules – kloudfile™ and kloudflow™ – in a pilot program designed to address data/document management, WSPs, workflow/business process management, compliance and risk mitigation.

Using the kloudtrack® kloudfile Module, Patriot immediately began converting hardcopy account records into digital data using basic OCR scanners and easily uploading the information to the kloudtrack® SaaS |Cloud platform. 

Beyond simple electronic storage, kloudtrack® incorporates complex search and retrieval functions and full workflow capabilities (kloudflow Module) that allow team members and executive management alike to share records in a secure environment with an audit trail of accountability built-in.

“In March, we were having our quarterly compliance meeting when we were notified during the meeting that a recent FINRA Home Office Audit had selected several of our variable annuity accounts for further review under FINRA compliance guidelines.  We conducted a Benchmark ROI Study for that single regulatory review instance and calculated a hard-dollar savings of more than $4,000 when the metrics of lost business and down-time various team members were calculated.”

Since kloudtrack® was implemented my sales productivity has tripled over the same period of the previous year. 

“On the Clock” – Timeliness a Key Factor in Compliance Audit/Risk Mitigation … 

In March, we were having our quarterly compliance meeting when we were notified DURING THE MEETING that a recent FINRA Home Office Audit had selected several of our variable annuity accounts for further review under FINRA compliance guidelines.”

 — Alan Pransky, Patriot Financial

In this instance, before the end of the meeting the home office person who was also in attendance informed Alan that, utilizing kloudtrack®, home office personnel were able to find all of the documentation they needed to submit to the FINRA.

“Normally, I would have had to travel the next morning to our OSJ location – which is more than 70 miles away – to begin the tedious tasks of researching and assembling information to comply with the regulators’ requests.  Keep in mind, these 1.5 hours of travel each way would be billed to the OSJ and are unproductive time for both me, as I am a producer, and the OSJ.  Use of kloudtrack® basically eliminates my need to travel to the OSJ as I can do virtually all of my work remotely,” added Pransky.

What could have been a hectic 24-hour period for Alan, his office administrator and various additional Patriot producer-reps ended up requiring absolutely no time to resolve.

“Before kloudtrack®, each time there was a surveillance request we would have to stop to research the matter and/or contact the representative. Then, we would have to copy the material and send it to the home office examiner.  This whole process could take half an hour or more and could occur several times each month. One of the best parts of the story is that by the very nature of kloudtrack® being SaaS|Cloud we were able to do all the work remotely,” continued Pransky.

 

Productivity ROI Already Included

Beyond the risk mitigation, compliance/audit preparation and response, Patriot has also tallied considerable savings from a productivity perspective during the kloudtrack® deployment – more than $1000 per month in additional hard-cost courier, delivery and postage fees alone – through greater productivity and by being able to put client investment dollars to work quicker.

Highlighting this point Alan emphasized, “Since kloudtrack® was implemented my sales productivity has tripled over the same period of the previous year.”  This was in large part because of his ability to remain in his office where his personal productivity is the greatest by utilizing the remote access features of kloudtrack®.

“The value-proposition of this type of capability cannot be emphasized enough and quickly garnered the attention of Patriot’s owners and the executive teams at the broker-dealer home office. Essentially, in just one review/audit instance the ability to efficiently organize our data from the moment an account is generated, combined with the ability to respond quicker and involve fewer internal employees during such reviews and audits, more than paid for the monthly kloudtrack® technology costs,” added Pransky.

Start Small and Scale

Industry analysts such as Gartner, Forrester and IDC agree that many businesses — particularly in the SME or mid-market — should be taking a closer look at their business processes and the new landscape of SaaS and outsourced enterprise applications.   The total cost of ownership (TCO) is often very low and the return on investment (ROI) is often realized in a very short period of time.  At a fundamental level, the benefits of SaaS platforms address both the goals of senior management and the best-practice needs of compliance and IT departments.

Also, adoption of SaaS | Cloud applications can begin small and scale infinitely so, go ahead pick a “pilot” program, develop some tangible metrics for ROI success and execute. You might be surprised how easy and effective these technologies can be.

On July 25, 2010, posted in: Case Studies by
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