Compliance. An issue most bankers don't relish. Often times it is explained away as a necessary evil! This approach makes difficult for the bank to stay on top of compliance issues and often leads to problems with examiners. This leads to compliance waves where the compliance officer works to get things ready for an exam or audit then the work load relaxes until the next exam or audit.
Based on the current state of affairs, most banks' find themselves overwhelmed with compliance workloads; they have limited staff and schedules, along with the increase demands from examiners, who want more risk management. Internal audits are conducted by just a few people, typically, they are reactionary, and they utilize outdated technology, if any technology at all. The workload is not slowing down anytime soon-if anything it is increasing.
What we propose is a complete rethinking of compliance-to what is called "Next-generation Compliance"-this is where banks are proactive with compliance rather than reactive. It smoothes out the waves and distributes the work throughout the organization, which makes the compliance load much lighter and much easier to manage. Such a change must happen on three levels: a bank's operational culture, their level of collaboration, and the technology used in audits.
- 1. Devise a compliance strategy
- Get executives onboard with the strategy
- Promote all team members to be proactive
- Create metrics to quantify the value of proactive compliance
- Does compliance result in an increased speed of reporting?
- Quality compliance management response?
- The larger scope includes overall compliance simplicity?
- Money and time saved?
- 1. Include people from multiple departments in compliance audits
- Standardize process across all areas of compliance audits
- Be flexible, and have reasonable expectations
- Make your auditors business-focused, independent, strategists
- They shouldn't be on an island
- Promote productivity
- Communication with regulators
- Involve them in the process early so they understand the improvements from the positive changes
- 1.Reassess your current compliance tools
- Is technology working efficiently for you?
- Break from the spreadsheet! You can't properly collaborate from a spreadsheet - there are easier ways
- Increase use of collaboration tools to centralize the compliance audit workflow
- With them, everyone can discuss and facilitate improved risk management
- Track the use of audit recommendations
- What good are recommendations if they aren't used?
- Provide continuous up-to-date analysis/status of risk management
Compliance and Banking
Regulators are asking for more risk management and compliance, but banks aren't able to address this increased workflow with more manpower. With tighter operating budgets, the solution is working smarter. Often times when a bank is not able, to deliver properly on compliance issues it results in the issuance of an MOU or a C&D to the bank. Restoration plans and strategies may be implemented and managed through continuous compliance.
If you're buying a bank, the regulatory hurdles are less. But modifying an existing bank's compliance processes requires a team effort; it's all about building a smarter bank!
If you're starting a bank, a culture of compliance can be built from the ground up as your institution evolves. A blank slate is easy to work with. But at the same time, new banks are subject to harsher regulatory scrutiny, which means compliance has to be a priority.
To learn more about Next-generation Compliance, click the link for more information.