Compliance management is an immense undertaking that has to be managed by each and every stakeholder in the banking and financial industry.

Why compliance management programs are necessary

Before we delve into the benefits, let’s look at the need for change management programs. Regulatory changes occur often and the scope of their impact is immense. The problem is that a regulation may have far-reaching consequences, and many of them may be unexpected. The financial industry is one of the most heavily regulated industries in the world, and it is easy to see why. The financial industry makes the world run – no other industry can run without the backing of the financial industry. Thus, governments try their best to make sure the financial industry runs right.

The financial industry has always been innovative but technology has fueled this innovation to new levels. The fast pace of innovation means that regulators are always trying to catch-up with the industry, which results in regulations coming out at a faster pace. A compliance management program is necessary because it allows the company to adapt to changes rapidly but in a managed manner.

Why Automated Compliance Management Programs need to be automated

The need for automation in compliance management

Automation isn’t needed in the world of regulations because people are too slow. People who work in financial regulation and compliance are highly skilled in their jobs and are highly respected in the industry. The problem is that regulations are so complicated that depending on manual work in it leads to failure. Regulations have far reaching consequences, so far reaching that sometimes they may not be realized at the time – only when complications occur.

The reason there are so many issues in compliance management is that everything is interlinked. A new regulation may be introduced and it may end up affecting a rule or procedure made years ago. Whenever regulatory changes are introduced the people working in compliance and regulation must go through everything again. They must manually check and make sure that there are no compliance or regulatory issues which may have been overlooked.

This means going though many different documents and spreadsheets and manually parsing them to find any potential conflicts. A slight regulatory change or adjustment may end up affecting a process created years ago. The hours spent going through all the records are hours which could have been much better spent elsewhere. Compliance officers and managers, instead of focusing on making compliance better, spend too much of their time making sure everything is being documented and administered clearly. If banking and financial institutions truly want exceptional compliance they need to automate the repetitive data intensive tasks so that compliance officers and managers have the time to focus on true compliance measures.

What makes compliance management perfect for automation

Compliance management is uniquely suited for automation due to the nature of the work. Managing compliance means managing a huge amount of information and the relationships between all the pieces of the information. All issues need to be tracked properly. This type of work which involves tracking, comparing, and managing information will always be more suited for computers.

This may raise a question – if computers were so much better at the task, why haven’t they been used for compliance management over the past few decades? The answer for that is simple – we did not have machine learning back then. We had the technology to help a computer maintain numerical records, which is why all accounting information is stored and managed on computers. However, when it came to policies, which were written in natural language, it was much harder to automate a solution.

This has changed now. Our automation technology has progressed vastly, which now allows us to manage information on computers better than we could ever do manually. If you give a computer 10,000 documents to store, they do it in an instant. If you ask a computer for records from the past year, you get them in seconds. These are tasks which would have taken hours to do manually but computers can do them in an instant.

That is what makes automation such a big success when it comes to regulatory change management. The whole process of change and compliance management involves comparing changes and mapping out links between old regulations, new regulations, rules, procedures, and so on. Doing it manually is the same as doing calculations manually when you can do them instantly with the help of a computer or a calculator.

Compliance management systems in action

To truly understand the game-changing nature of automation for compliance management, it is necessary to see one in action. Compliance management is a very complicated field. Compliance management officers and managers must ensure that all the company’s interdependent policies, processes, rules, and documentation are perfectly compliant with all the interdependent regulations, laws, and business requirements. Bringing this all together is a very complicated task, and the only reason industries have managed to do this so far is that compliance officers spend all their time and resources on ensuring this harmony.

This isn’t ideal. Organizations don’t want their compliance employees to spend such a large chunk of their time on administration alone – that is time that should be spent on compliance itself. The perfect solution to changing this situation is to use a compliance management system. A compliance management system allows you to store, map, and discuss all compliance related information. When a policy is created there is an option to map out its links to other regulations and policies. The map of the links between policies, regulations, laws, and documentation, which may only exist as a document right now, becomes a smart database.

The workflow changes are immense. Once a changed regulation is introduced, it is directly fed into the system. The system parses the new regulation(s) and compares it to the previous regulation(s), looking for changes. All the parts of the regulation(s) which have seen a change are automatically highlighted. This is work which used to take hours – it is now done in just a few seconds. Then the compliance officers can intelligently extract information relevant to them. For instance, if the financial institution generally acts as a creditor, the compliance management system can find regulations and policies which refer to the creditor, and so on.

The end result of automation is that activities are done faster. Information is available instantly. Tracking is done automatically. The best part is that instead of costing companies more (better solutions generally have a big price tag attached) compliance management systems end up saving money for the organization. This isn’t just a gamechanger for compliance managers and employees – it is a gamechanger for the upper management. They now have direct access to compliance reports and information and can access it any time they want to know about compliance issues of the organization.

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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