Over the last decade, the Banking, financial services, and insurance BFSI sector has taken steps to improve customer service through efficient, easily accessible and digitally advanced products and services. This has happened through digital transformation. Remember the time when for anything and everything, you had to run to your bank and wait in endless queues. The banking industry has undergone a complete digital transformation enabling us, to complete all transactions quickly & swiftly. In fact, we are discouraged from visiting our banks anymore and everything can be done through mobile apps/ net banking. The speed with which technological changes have been implemented by BFSI sector is commendable.
However, considering the dynamic environment in which BFSI sector has to sustain and keep on their toes to meet the ever-changing statutory compliances, it is surprising to note that they are lagging behind in their lifecycle management of the contract processes. Contracts are the foundations of any business. They govern all business operations from standard rental agreements to complicated hedging contracts & consortium contracts. Contracts are also vital for regulatory compliance and risk management; as they provide visibility into every aspect of an organization’s operations; like where it is doing business, with whom, under what terms, and for what purpose. And the lack of attention of risk & compliance can give unwanted invitations of heavy penalties. Yet, it is sad to note that the majority of the BFSI sector continues to manage contracts in separate repositories – with contracts sitting in silos- either by geography, business function or contract type.
Contract Management Technology enables organizations to automate and streamline all aspects of the Contract Life Cycle to increase visibility, compliance and contracting velocity. Enterprises approach to contract lifecycle management also mitigates the risks of losing revenue due to lost time, money or potentially damaged reputation. With a contract management system, an organization can make an entire portfolio of contracts visible to all relevant stakeholders. The contracts are searchable & secure. This software covers the entire contract lifecycle from contract request, contract creation to contract renewal/ disposition. This can be used to monitor an organization’s contracting opportunities and risks. This insight can help management save precious time & resources and can help in better cash flow management. In fact, BFSI sector all over the world is adopting contract management solutions like smartContract to meet regulatory & compliance standards regarding contract accountability & transparency as it provides them the following advantages:
- Effective monitoring of several high value contracts
With an enterprise approach to contract life cycle management, BFSI Industries can effectively manage & monitor their high value contracts. This enables them to gain access to a centralized contract management repository with a customizable dashboard giving a complete view of all contracts in one place. This tool also alerts the relevant stakeholders to efficiently manage any contractual obligations/ deadlines/ extensions/ renewals.
- Efficient vendor management & control
Increasingly, a large number of BFSI players are outsourcing a large part of their work to third party vendors & are concentrating only on their core competencies. As a result, a wide range of services like legal, IT, auditing and many more is outsourced. Considering this industry deals with customer confidential data & is subject to heavy compliances, it is imperative that their vendor contracts are subject to heavy scrutiny. Contract management solutions like smartContract provide a bird’s eye view to all vendor contracts and a customizable third-party portal via which vendor can also view all their existing contracts with an organization.
- Audit compliance
With Contract management systems; it is easier to meet statutory, regulatory & audit compliances at all times. This is because, with contract management systems, you can track & store all contracts during contract creation, negotiations and renewals/ dispositions. This enables organizations to maintain audit trails and manage real time compliance.
- Enhanced contract visibility & management
Centralized contract repository like the one smartContract enables integration with existing processes & tools like ERP so that all the organization’s contract can be viewed at one single place. This integration also, translates into greater visibility and increased co-operation & collaboration between different departments & geographies.
- Risk Mitigation
Contract Lifecycle management like smartContract can generate reports on contract performance and utilization, vendor risk management and cash flow management. It can also analyse historical data to analyse risks associated with contracts, clauses & vendors and can suggest alternative clauses, vendors etc to mitigate the risks. Considering the above; it is increasingly becoming imperative for BFSI Industry to adopt CLM & upgrade its contract management solutions not just to survive but to thrive in this dynamic financial market.
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