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Platform Technology and the Impact for Compliance Experts
By Christian Schmidt, Director Global Customs & Trade Compliance EMEA, Adient [NYSE: ADNT]
In a digital world where companies are more technology-driven than ever before, Platform technology and platform solutions are growing rapidly. Many companies use open and integrated platform technologies as the basis for their business model as well as their strategy and actively pursue the change. It is not just a question of using new technologies to facilitate economic and social interaction, but of much more. Companies that are increasingly using platform technologies are reorganizing processes and relying on flatter and more inclusive processes to enable exchanges between many stakeholders. Companies hope to create constant Innovation, and they will.
Many companies are, therefore adapting their business model and are on the way to increasingly using platform technology to facilitate economic exchange. Companies are also linked to connect people and exchange information, but what distinguishes this technology? What makes it so successful compared to traditional products? Why are platforms gaining so much value? And why will platform business always win compared to traditional product businesses? What impact or added value can be generated for compliance experts? Compliance departments need to delve deeper into this matter in order to understand the impact platforms have from a compliance perspective. There is no doubt that benefits can also be generated, but before this is the case, there must be a general understanding of the technology.
So generally, a platform is an open architecture combined with a governance model that is designed to facilitate interactions. An open architecture allows third parties to participate, build, and innovate. The governance will provide power to exclude bad actors as well as steer community behavior. The overall goal of a platform is to consummate and to create value.
Keeping this in mind, there are many arguments and reasons that explain the enormous growth of platform technology. Certainly, one of the most important factors is the network effect combined with virality. Virality expands the network, and the network effect can make the network more valuable.
For compliance experts, the use of platform technologies could also be the ideal solution to address the compliance tasks and issues of any nature in the company
Another point is due to the increasing transformation of companies from products to platforms. Generally, it can be said that every enterprise that grows in value by adding information or community can be transformed. And the greater the proportion of value, the sooner it will transform.
Again, the idea is to achieve a network effect by adding information to a community. Furthermore, platforms make it possible to use better "matching" and allow for transactions that might not have taken place. Values are created by connecting people to other people or content. This makes platforms so valuable.
But beware: Platforms can scale quickly and confront compliance experts with risks. Rapid expansion is often possible for platforms and is also the goal of companies. However, it is important to ensure that controls and compliance rules can also be scaled quickly otherwise, it can lead to increased risk for companies. Certainly, a not so easy task for compliance experts. An increased number of transactions is also a factor for an increase in the potential risk. Another potential risk is related to platforms is that platforms often find ways to expand beyond the core interactions. These new kinds of interactions most likely attract new participants in the process. This is an additional reason why compliance experts must be aware of the functionality of platforms to serve all potential channels. It will be decisive that the solutions used in the departments can also cover an increased volume without losing any major time for the overall process.
For compliance experts, the use of platform technologies could also be the ideal solution to address the compliance tasks and issues of any nature in the company. Especially the said network effect can support compliance experts in a meaningful way. Good compliance programs are also characterized by the fact that all employees and other partners are involved and reached. But for this, too, as stated, it is necessary to gain a general understanding of how platform technology works in order to start a compliance movement from a platform perspective.
In any case, compliance experts should identify internal and external initiatives related to platform technology in the company environment and join early. The question could, therefore be what an agreed compliance platform can look like in the company or how the compliance aspect can be integrated into existing platforms without impacting the value proportion itself. Compliance experts must deal with these questions and take the necessary steps if they want to use the network effect positively for themselves.
Platforms make valuable interactions easy for users, this leaves room for compliance experts to find new ways to create value on the platform from a compliance perspective too.