A new and better approach towards tracking regulatory changes

Posted by: Bobby O'Neal | May 31, 2018

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Today’s business climate is more complex and more challenging than ever before. As time goes on, regulations become more complex and more detailed. The financial industry’s innovation easily outpaces the regulatory bodies, which then start working on creating regulations for the new ideas, products, and businesses.

New regulations or changes to existing regulations naturally increase ambiguity and inherent risk, thus increasing the probability of operational breakdowns and becoming non-compliant. Risk and compliance are some of the most sacred principles for banks and other financial institutions. These organizations know that their ability to create a profit depends on ensuring that they are being compliant with regulations and are managing risks properly.

Checklist for Reducing Cost of Compliance

Managing Regulatory Change in 2018

This means that organizations in 2018 need regulatory change management solutions that belong in 2018. There was a time when compliance and regulatory changes could be tracked manually. Regulatory changes came out slowly and every organization used to manage the change manually. This isn’t true anymore – changes come out faster, and all the major organizations are using regulatory change management systems.

The biggest financial organizations in the world are investing millions in regulatory change management systems. This is a major problem for small and medium sized organizations, because this makes it hard to compete with the bigger players in the market. The most disadvantaged are regional banks and credit unions. Huge organizations that are spread nationwide do not have any problem spending millions, but smaller banks with branches within a region cannot do the same. This means that bigger organizations are much more efficient and end up outpacing smaller organizations. This is highly problematic, as the main advantage smaller organizations have when competing with bigger organizations is their agility.

A new and better approach towards tracking regulatory changes

This is why regulatory change management systems are now necessary for all financial organizations. However, the good thing is that automated regulatory change management systems are no longer out of the reach of small and mid-sized organizations. There are great regulatory change management systems available that have been specifically made for such organizations and they are priced accordingly.

Deregulation increases the need for regulatory change management as well.

The current administration seems to be focusing on deregulation. It is important to note that deregulation does not mean reduced compliance and regulatory change management costs. While many banks and financial institutions may view de-regulation as a positive step in helping to reduce costs, these same banks are also struggling to understand the impact these changes have within their operations. The problem is compounded since instead of one big bang, these changes are happening one-at-a-time.

Effective regulatory change management

Unless a bank has effectively mapped their risks, policies, procedures, training plans, assessments, audit templates and compliance calendar to their associated regulatory requirements, the bank’s compliance staff is often scrambling to understand the impact a regulatory change creates, what needs to be done and managing the timely completion of those activities. The result is often non-compliance and/or a high probability that the business will not meet their regulatory requirements on time.

As such, one of the top trends in 2018 for mid-sized banks is to start mapping all their risks, policies, procedures, training plans, assessments, audit templates and compliance calendar to the associated regulations and regulatory requirements. While this can be done in spreadsheets, a more integrated GRC tool will typically be implemented to allow the visualization of these links and to easily capture all this data across the various departments and locations in the bank.

This is the perfect time for banks and other financial institutions to start trying regulatory change management systems. If you want to know more about how a regulatory change management system can help your organization or want to see a demo of a regulatory change management system for your organization, simply reach out to us.

It is important to note that investing in regulatory change management isn’t an expense – it is an investment. It will result in a major reduction in non-compliance, meaning that all the penalties incurred for non-compliance will be reduced to a large margin as well. It also increases the speed at which regulatory change can be managed, resulting in a more agile organization. Anyone in the financial industry knows the importance of agility in the world of finance – every second matters, and regulatory change management systems save much more than just seconds.

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.

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