4 Compliance Questions Every Financial Organization Should Ask Itself

Financial organizations want to improve the way they manage compliance. There is a lot of room for improvement in the compliance management domain for many businesses; compliance costs can be lowered, compliance levels can be increased, compliance reporting can be enhanced, and so on. The first step to finding the correct answer to the challenges organizations face is to ask the right question. Asking the right question sends the organization down a path to realize the root cause of challenges and discover new solutions to existing problems.

Here are four illuminating questions that financial organizations need to ask themselves about their compliance management frameworks:

1- Is our approach to compliance aligned with strategy, purpose, and values, not just laws and regulations?

Assessing the alignment of the compliance management processes is a foundational question that every organization needs to ask. The difference in approach towards compliance forms the root of each compliance process across the organization. Ensuring that the compliance management approach is aligned with laws and regulations does not mean that compliance management has been fully achieved; the true aim of compliance management is to help the business grow while staying compliant with all laws and regulations.

Financial organizations need to connect their compliance goals with organizational goals. Aligning compliance with corporate goals requires an assessment of the compliance ramifications of what the business wants to achieve. The compliance team needs to look at the compliance issues expected from the organization’s plan for the year and act accordingly. The compliance team also needs to ensure that compliance is easy to achieve throughout the organization while still maintaining organizational efficiency.

2- Are our compliance processes enabled by technology and data?

There is almost no work that is handled without using technology and data in a financial organization. Still, the use of technology is often extremely limited in the compliance domain. Many organizations are still using spreadsheets to store data and analyze everything manually. This manual approach puts organizations at a significant disadvantage and leaves them vulnerable to competitors because compliance technology is now very accessible and quickly becoming a norm.

Financial organizations need to look at the available compliance management technology platforms to assess their benefits from implementing compliance technology. A comparison of how long compliance tasks currently take and how long they will be completed once a compliance platform has been implemented. Comparing the time, it takes to complete a task gives the organization an innovative idea of the benefits it can expect.

3- Are our compliance activities predictive, preventative, and proactive and not just detective?

A lot of organizations are still focused on detecting non-compliance so it can be fixed. This is a minimal view of what compliance can achieve when the compliance team is empowered and has the right compliance tools and technology in its arsenal. Detecting non-compliance is essential to mitigate problems, but it cannot help an organization reduce non-compliance before it occurs.

Predicting compliance issues based on historical trends gives compliance teams an early warning about emerging compliance problems. Click To Tweet

Predicting compliance issues based on historical trends gives compliance teams an early warning about emerging compliance problems. Instead of simply looking at current compliance violations, the compliance team can look at real-time compliance data and detect problematic trends. The early warning provides ample time to design and implement a control within the affected process, thereby preventing most of the similar compliance violations that may have occurred otherwise.

4- Is the total cost of compliance understood across the organization, and is the organization pursuing opportunities to reduce this through some sort of transformation?

There are two dimensions of compliance cost that need to be assessed. The first is that the compliance cost has to be understood and owned throughout the organization. Looking at the compliance budget as the compliance department’s budget alone is not an accurate assessment of the situation. While the compliance team is the team that is primarily responsible for monitoring and managing compliance, ensuring compliance is the duty of every employee in every department within the organization. It would thus be prudent to either spread the cost of compliance across departments or explain to them the criticality of the compliance team’s work.

The other dimension is cost reduction in compliance. No business wants to reduce its compliance capabilities, making them apprehensive about starting a cost-cutting program for compliance management. However, it must be remembered that it is not necessary to reduce operational compliance efficiency to reduce compliance costs; the business can also focus on robotic process automation and workflow streamlining to accomplish much more while using fewer resources. Many of the new compliance management platforms can help reduce the costs of compliance.

Interested in seeing how your organization can enhance the way it manages compliance? Get in touch with our experts for a demo of the American Bankers Association (ABA) endorsed solution for compliance management, Predict360.