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The Future of Compliance in Banks
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As banks navigate the ever-changing regulatory landscape, it’s essential to stay ahead of the curve and adapt to emerging trends. In this article, we’ll explore the key challenges and opportunities for improvement in bank compliance, highlighting the need for pressure testing, agile adoption, and innovation.
Pressure Testing: Ensuring Effectiveness and Efficiency
Regularly testing compliance programs is crucial to ensure they are effective and efficient. This involves:
- Identifying areas of improvement and implementing corrective measures
- Conducting regular audits and risk assessments
- Evaluating the impact of new regulations on existing compliance frameworks
Agile Adoption: Gaining Speed and Efficiency
Compliance functions can benefit from adopting agile ways of working, which enables them to:
- Gain speed and efficiency while maintaining effectiveness and independence
- Stay up-to-date with changing regulatory requirements
- Focus on high-priority tasks and projects
Top 5 Topics Shaping the Compliance Landscape
Survey participants identified five key topics that will shape the compliance landscape over the next three years:
Efficiency
Banks should develop specific compliance use cases for automation and advanced analytics.
Data Availability
Banks need data-driven initiatives, such as analytics controls and innovative digital solutions, to remedy current data shortages or low quality of data.
Regulatory
Recent discussion papers from the European Banking Authority and the European Central Bank, and a single rule book on centralized supervision change, indicate that ESG (environmental, social, and governance), resilience, and anti-money-laundering enforcement will be key regulatory topics going forward.
Availability of Qualified Employees
Digital and analytics capabilities require employees with both vertical expertise and project management skills and classic core compliance expertise.
Comprehensive Risk Assessment and Oversight
Compliance and anti-financial-crime risk assessment will become increasingly data-driven, requiring banks to:
- Develop robust data analytics capabilities
- Implement effective risk management strategies
- Continuously monitor and assess emerging risks
Conclusion
Banks need to start tackling these issues now to make their compliance functions fit for the future. By adopting agile ways of working, investing in innovation, and focusing on key topics such as efficiency, data availability, regulatory requirements, employee skills, and comprehensive risk assessment, banks can ensure they remain compliant with changing regulations and stay ahead of the curve.