Management often wonders where this need for regulatory compliance software suddenly came from, and we cannot really blame them for thinking this way. Banks and financial institutions have been running perfectly fine for centuries now without needing financial compliance software, so why do they need them now? That’s a valid question and it has a valid answer too.
1. The regulatory environment of the financial sector has drastically changed
The first factor that creates the need for compliance monitoring software is the stricter regulatory environment banks and financial institutions now face. The financial crisis of 2008 has made governments all over the world aware of the immense risk that is posed by a financial sector without enough regulations. When the financial sector was pumping money into the economy, they had a lot of leeway – when it started hurting the economy the tone of regulatory bodies changed. The type of regulations that banks now have to comply with did not exist a decade ago. These modern regulations need modern solutions.
2. The regulatory bodies are now using the same technology
The simplest and the most alarming reason that businesses need regulatory compliance software now is that regulatory bodies are now using data analysis and other technologies to audit and find non-compliance incidents. Since banks and financial institutions primarily focus on compliance to ensure that these regulatory bodies do not catch anything, they now need to infuse technology into their compliance processes as well. No institution can hope to keep up with digital audits and scanning using manual methods such as keeping data in spreadsheets. Back when the regulatory bodies were slow, and audits were completely manual the spreadsheets were enough, but not anymore.
3. There is an increased focus on compliance due to sanctions
The fines for non-compliance related to sanction dwarf any investment required to implement compliance monitoring software. BNP Paribas, the parent company of First Hawaiian Bank, the state’s largest bank, agreed to pay a $9 billion fine recently for violating sanctions. The changing global geopolitical environment has made regulatory bodies focus more on sanction related compliance. Terrorism is another major reason compliance is taken so seriously now; banks need to have the right controls in place to ensure that every transaction that passes through them is fully compliant with local and federal laws. This is difficult to maintain through manual compliance monitoring because of the high volume of transactions in the digital world. Banks and financial institutions thus need automated compliance monitoring solutions.
4. Compliance monitoring software can be implemented painlessly
The advent of cloud-based GRC solutions such as regulatory compliance software has also been a gamechanger. Implementations were expensive and complicated before cloud based systems were available. Banks had to invest in hardware and implement the compliance technology within their network. This means a significant technology investment, a high cost, and the most damaging factor: disruptions in business as the solution was implemented. These complications made many organizations think that GRC implementations were simply not worth the trouble and kept managing regulatory compliance manually.
Cloud based solutions have solved all these problems. Since the solution is on the cloud there is no local hardware required, which significantly reduces the implementation costs. Cloud based solutions don’t need to be implemented on the software side either, which further reduces implementation costs and time. The most important part is that cloud solutions are integrated with local data on the cloud and can be used when they are ready. They cause no disruptions in business processes while they are being integrated.
When you look at the increasing regulatory pressure, the growing fines, and the increasing sophistication in technology used by regulatory bodies, it is easy to see why compliance monitoring software is now considered a necessity in the financial sector. The decreasing costs, implementation time, and ease of implementation have removed any objections that management used to have about implementing the technology. Cloud solutions don’t require long-term commitments either – you can simply start using them with one user for a few months and assess the benefits that it can deliver you.
If you are looking for ways to improve regulatory compliance within your organization, you should get in touch with the Predict360 team. We will assess your needs and them accordingly give you a demonstration of how our American Bankers Association endorsed compliance solution can help. We also provide trials to interested organizations.
About the Company
360factors, Inc. (Austin, TX) helps companies improve business performance by reducing risk and ensuring compliance. Predict360, its flagship software product, vertically integrates regulations and requirements, policies and procedures management, risks and controls, audit management and inspections, and on-line training and qualifications, in a single cloud-based platform based on artificial intelligence.