Edward Vincent, CEO of SRA Watchtower, on evolving financial risk management into a proactive, tech-driven force supporting U.S. community banks and credit unions.
What inspired you to take on the role as the CEO of SRA Watchtower, and what is your vision for the company’s future?
Local, small businesses represent the heartbeat of the American economy. These entrepreneurs rely on partnerships with local financial institutions (FIs) to incubate, expand, and operate, which means the health and well-being of these local FIs are crucial to enabling U.S. innovation and progress. Achieving safety and soundness within these FIs starts with robust risk management practices, supported by effective people, processes, and increasingly, technology. Simply put, the future of risk management demands transforming experience into scalable expertise – this is what Watchtower does and what ultimately attracted me to join SRA Watchtower. I envision a future where our Watchtower platform enables best-in-class risk management practices in community-focused banks and credit unions across the U.S.
SRA Watchtower has transitioned from a risk consulting firm to a SaaS platform provider. What inspired this shift, and how has it impacted the company’s approach to risk management?
The company’s roots as risk professionals reflect the inherent value we bring to financial institutions. We say that Watchtower was built by risk pros for risk pros. Originally, we tackled risk problems as consultants on a bespoke basis. We aim to impact a wider market than was possible as a consultancy, so we leveraged our insights to build a SaaS solution with a holistic view of risk from the top-of-the-house. This approach is unique because, unlike a GRC and other risk-related point solutions that often take a bottom-up approach, Watchtower starts by addressing strategic needs at the top. Having divested the consulting practice, while retaining the risk-pro DNA, we are laser-focused on delivering this top-of-the-house, holistic view of risk to FIs.
You emphasize the importance of proactive risk management systems. How does Watchtower’s Holistic Risk Intelligence Platform™ support organizations in anticipating and mitigating risks effectively?
The days of checking the box with regulators by reporting stale, call report data are gone. Instead, many institutions use Watchtower to aggregate, analyze, and evaluate risk-related data on a more frequent basis. This approach yields insights that drive risk-informed decisions daily, weekly and monthly, while also empowering risk teams to initiate proactive dialogue with regulatory partners. Furthermore, establishing a culture of risk within an institution amplifies the power of a risk management system. By encouraging and rewarding colleagues for providing transparency into risk data, organizations can detect emerging risks and implement early mitigation activities.
Data integration is a critical aspect of modern risk management. How does SRA Watchtower ensure that financial institutions can gain a comprehensive view of their risks and performance indicators?
Technology and access to data are crucial enablers of effective risk management. Risk-related data exists everywhere – in spreadsheets, notebooks, and siloed systems. FIs must (i) acquire, ingest and normalize this data, (ii) analyze and evaluate it, and (iii) deliver the resulting insights to stakeholders. Each of these steps requires different skills, tools, and ongoing investment. These three capabilities are built into Watchtower, starting with the automated ingestion and normalization of data inputs from core and general ledger files, along with inputs from AML, Fraud, ALCO, Audit, GRC, Cyber-risk and other sources. Watchtower then transforms these inputs into key risk indicators (KRIs). FIs utilizing Watchtower begin with a baseline set of 44 Essential KRIs, from which they may progress to a broader set of 96 Foundational KRIs, access a library of additional unique indicators, and can create personalized indicators tailored to their institution’s needs.
With your extensive experience in financial technology, what do you see as the biggest challenges for boards in managing risk today, and how does Watchtower address these challenges?
Education is the first challenge, as not all Boards are well-versed in risk and risk management practices. Evaluating and communicating a consistent set of metrics, such as Watchtower’s manageable set of (44) Essential KRIs, helps educate Board members (and regulators as well) on how these metrics influence business decisions.
Effective risk reporting is vital for informed decision-making. Could you elaborate on how Watchtower’s dashboards and data visualizations enhance risk reporting and communication for boards?
A recent article by Fraser, Quail, Simpkins highlighted the risk of Boards and management risk committees becoming overly focused on reporting for reporting’s sake, at the expense of applying the insights to enact risk-informed decisions. While excessive reporting can hamper risk-informed decision-making, Watchtower’s dashboards and data visualizations highlight trends, outliers, and breaches against benchmarks and appetites. This focused approach enables stakeholders to quickly identify the most important areas requiring their attention and collaborative effort, ensuring that risk management decisions are both informed and actionable.
Regulatory pressures are ever-evolving. How does SRA Watchtower assist financial institutions in sustaining compliance while maintaining performance under these stringent requirements?
SRA Watchtower advocates for the use of standardized key risk indicators, calculated from timely data inputs and benchmarked against transparent, quantitative targets. By sharing these indicators more frequently with regulators, Watchtower aims to foster more frequent, consistent, collaborative interactions that ultimately reduce the overall regulatory burden on financial institutions in the long-run. Additionally, SaaS solutions like Watchtower represent an effective method to scale risk management programs, enabling institutions to navigate the complex regulatory environment.
In your view, how can financial institutions leverage risk intelligence to align their decision-making processes with strategic goals?
During strategic planning, financial institutions should align their risk management program with their strategic goals to ensure long-term success. At SRA Watchtower, we believe risk and strategy (desired returns) are two sides of the same coin — integrating risk intelligence into decision-making helps banks and credit unions anticipate challenges, adapt strategies, remain resilient and achieve their objectives. Risk should be embedded throughout the planning process, rather than treated as a separate element. Strategic planning is an ongoing effort requiring continuous alignment between risk appetite and business goals. For instance, a bank pursuing aggressive loan growth may face capital or regulatory constraints, necessitating strategic adjustments such as raising capital or refining risk management.
Institutions that excel in this area collaborate across all lines of defense, ensuring that risk intelligence informs strategic decisions enterprise-wide. A holistic view of risk allows institutions to proactively manage uncertainties and stay adaptable, fostering stronger resilience and long-term success.
As the CEO, how do you foster a culture of innovation within SRA Watchtower to continually improve the platform and meet the dynamic needs of the financial sector?
Creating a culture of innovation within a SaaS business such as SRA Watchtower involves similar principles to those that foster a culture of risk within an FI. It begins with setting the right tone starting from the top – embracing and modeling a willingness to learn and adapt quickly (aka fail fast), encouraging challenges to the status quo, driving accountability deep into the organization, incentivizing desired behaviors (ahead of outcomes), and emphasizing the risk/reward trade-off.
We also must look outside our four walls as innovation is occurring throughout the FI, FinTech, FinReg, and RegTech sectors. At SRA Watchtower, we concentrate our efforts on core activities while actively seeking partnerships with innovative players in adjacent fields, ensuring we stay at the forefront of industry advancements.
What are your key priorities for SRA Watchtower, and how do you plan to drive the company’s growth in the coming years?
We aim to build Watchtower from the outside-in with a deep understanding of financial institution needs and regulatory feedback to deliver the best holistic risk intelligence platform to FIs and foster sustainable growth.
In the years ahead, FIs will benefit from Watchtower’s investments that drive operating efficiencies (automated data ingestion & information exchange with regulators), deliver greater insight to the first, second, and third lines of defense (benchmarks, reporting and dashboards), and enable forward-focused decisions with foresight (via Machine Learning, Large Language Models and Automated Learning).
Stay Ahead of the Financial Curve with Our Latest Fintech News Updates!
