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Five tips to improving the effectiveness of your compliance investments

Lance Mercereau
Lance Mercereau
1 October 2019

The proliferation of disconnected systems, outdated tools and manual processes has caused extreme complexity and skyrocketing costs for financial services firms, which currently spend 7% of total operating costs on compliance technology, headcount and transformation. This simply isn’t profitable for companies regardless of industry. So, what’s the answer?

One of the biggest issues facing compliance professionals is the low level of automation in everyday tasks. This is not only inefficient but also causes errors and lapses that can be costly. Furthermore, a lack of automation is not scalable taking into consideration that companies must deal with numerous regulatory updates and alerts every day that need to be effectively assessed and actioned, which have a ripple effect throughout the organization.

The problem of the past

Historically, companies have invested in a hybrid of technologies and services to address compliance obligations. Unfortunately, due to a combination of developing these software solutions in-house, buying solutions from vendors, outsourcing compliance capabilities, and relying on consultancies, few compliance organizations have a modern, simplified regulatory relationship management platform that provides visibility and transparency of the entire compliance lifecycle.

In other words, though most compliance organizations have many of the necessary building blocks to identify and manage compliance and non-financial risk, they are neither connected nor codified, so when a regulatory update comes in, human intervention is required to action the alert through each stage:

End to end compliance lifecycle
(1) Track regulatory changes (2) Assess compliance-related risks (3) Monitor and test controls (4) Report regulatory compliance (5) Manage compliance obligations (6) Advise and implement compliance change (7) Manage regulatory and stakeholder relations

Disparate legacy systems and data silos, coupled with manual processes, have inhibited organizations from being able to have an efficient, fully automated end-to-end compliance lifecycle management capability.

In response to cost and resource constraints, companies are moving toward a holistic approach to compliance management, consolidating a myriad of regulatory intelligence, contextual information and related documents from traditionally separated functions into a single, company-wide source.

This move from focusing on and implementing stage specific point solutions makes sense but causes complexities without strategic planning, including establishing the right future proof technology infrastructure to run and manage compliance technologies and processes. Yet, without change, compliance costs will continue to increase as the volume of regulatory changes rise.

Five ways to get the most out of your compliance investments

With the right direction, business leaders can improve and strengthen the performance of compliance, reducing the risk of, or actual, regulatory fines. The question is where to start – and technology is a good place, though it’s not the sole answer.

I have provided five areas that are ripe for business optimization; five areas that are also some of the biggest expenditures for companies investing in compliance, including capital, fines and redress:

  • The hiring of consultants such as lawyers to advise on regulatory compliance matters, specialists to help review and write policies at station, and other subject matter experts to support internal regulatory change, is a necessity though there are steps you can take to reduce spending in this category. For example, insist that consultants codify their tools and methodologies into a technology platform or system so that manual activities are automated into a repeatable, scalable and auditable process.
  • Technology and IT related services can cost a fortune for compliance organizations, especially if these investments are not integrated into a standardized solution. Not surprisingly, by consolidating multiple systems into a single platform, users can access multiple data sources, and systems through one interface, improving productivity. This centralized compliance capability will not only improve employee productivity, and reduce total technology costs, it will also provide better insight through a holistic view of potential operational risks throughout the compliance lifecycle and in adjacent business operations.
  • Internal and external audits are vital to ensure standards and regulations are being met, yet, many of the tools used by teams and consultants are manual, making it a challenge to be proactive in identifying issues before they become costly problems. Leveraging data and analytics, coupled with automated alerts to inform colleagues in the first and seconds lines of defense in testing activities, processes, or controls in their areas of expertise, can significantly improve the effectiveness of audit teams.
  • Poor employee productivity caused by error-prone manual processes can be addressed quickly and effectively by embracing robotic process automation . For example,the real-time scanning and collection of new regulatory updates, the monitoring and testing of compliance activities and controls to streamline audits, and pulling and aggregating data from multiple sources to enhance the efficiency of regulatory, non-financial and risk reporting. By embracing workplace automation, colleagues will spend more time serving as business partners and less time on low value tasks.
  • High employee turnover , especially in regulated industries such as banking, where specialist expertise and competencies are required, is detrimental because recruitment, training and development aren’t cheap. Losing talent can also hurt employee morale, productivity and quality of service. One way to lower the risk of business disruption is to ensure that relevant knowledge is continuously captured, codified and shared with colleagues using knowledge management systems integrated into technology platforms.

Optimizing current and future investments in compliance requires developing a roadmap, which can help an organization define and plan its digital-first modernization undertakings without wasting valuable money, time and resources. Without a vision, compliance leaders will be reacting to the mercy of regulatory developments, other business functions and priorities, including board-mandated cost saving initiatives.

About RequirementONE

Our vision is to provide every compliance organization in the world with actionable and personalized regulatory intelligence – streamed to all decision-makers employees and business systems. The fully managed RequirementONE platform uniquely simplifies compliance by automating the curation and distribution of actionable regulatory intelligence throughout the compliance lifecycle, lowering the cost of compliance management by 50%. To learn more, visit www.requirementone.com