Compliance managers play a critical role in the banking and finance industries. Compliance managers are highly qualified individuals who have the responsibility to ensure that their organization can continue to operate and generate a business while complying with multiple sets of complicated rules, laws, and regulations. The work done by compliance managers and officers is necessary, as any organization that fails at managing compliance will be heavily penalized by regulatory bodies.

Managing compliance, as any compliance expert will be able to tell you, not an easy job. It requires extensive knowledge related to multiple banking and finance domains. It also requires commitment to continuous vigilance. The compliance team must go through as many documents, policies, and incident reports as they can to minimize potential compliance issues throughout the organization.

It is difficult for those outside of the compliance domain to understand just how taxing this work can be. Each banking domain has multiple rules and regulations. Some of these are related to preventing fraud, some about protecting the privacy of customers, laws about equal opportunity lending, and much more. This means that if a bank is dealing in 5 different domains (such as retail banking, lending, mortgages, etc.) they may be dealing with 15 to 20 different sets of rules and regulations. The compliance team needs to overlook the compliance function for each of these rules and regulations and must work with each department in the bank to ensure compliance. 5 banking domains is a very low estimate -most banks deal in more than 5 banking products and services.

However, the role of compliance managers, which has largely been the same over the past few decades, is now changing. Changing market forces and business requirements, coupled with new compliance technology is enabling compliance teams to focus on the big picture.

Banking rules and regulations are slowly changing, and we can expect there to be regulations that enable banks to deliver online services and payments at faster speeds. Click To Tweet

New business requirements

Banks are becoming more agile. Banks have historically been slower to change compared to other industries by design. Since banks play such a critical role in acting as the backbone of the economy, no authority of businessperson wants banks to change too rapidly. Each step taken to change banking is discussed for a long time and then the regulatory bodies create rules and regulations to ensure that the changes can be implemented without disrupting economic activities.

Banking rules and regulations are slowly changing, and we can expect there to be regulations that enable banks to deliver online services and payments at faster speeds. There have also been talks about changing the way we write regulations and laws to make it easier for the industry to automate compliance. Banks want to deliver faster services to customers, but that will require the compliance function to work at a faster pace as well.

Better technology

The rise of Regtech (Regulatory technology) is a major factor in the evolution of compliance in banking. Most small to mid-sized banking institutions are still managing compliance through general purpose software solutions such as Microsoft Word and Microsoft Excel. As excellent and powerful as these solutions are, it is important to remember that they are general-purpose solutions that were not designed to manage compliance in the banking industry.

Managing something as complicated and critical as compliance with general purpose solutions is analogous to attempting surgery with a kitchen knife. Sure, you may technically have a knife, and theoretically it is possible to do surgery with a kitchen knife, but there will be a risk of complications. On the other hand, using specialized tools is like finally getting access to a scalpel that was designed to ensure that surgeries can be carried out with utmost efficiency and preciseness.

Unprecedented visibility

Regtech has enabled unprecedented visibility into compliance functions across the organization, which allows today’s compliance managers to accomplish a lot more than it was possible until a decade or two ago. Modern compliance solution can monitor compliance functions in real-time and provide notifications in a dashboard whenever there is an issue. Before the implementation of compliance technology, compliance information had to be pulled by compliance teams. They had to request reports from different departments of the organization. Compliance technology turns this into a push function – all the important information is automatically gathered and sent to the compliance team.

This unprecedented visibility allows compliance managers to look at the big picture and increase the scope of their projects. Instead of having to comb through documents and business processes to locate non-compliance manually, compliance technology automatically highlights issues in the compliance framework. Compliance managers can instead focus on creating new strategies and solving compliance problems through better business processes and training. It enables them to drive excellence in banking and finance governance and performance.

Interested in seeing how your compliance team will perform if you provide them with modern tools and technology? Get in touch with our compliance experts to see how our American Bankers Association endorsed compliance solution can provide your organization with the compliance tools that you need.