Compliance Functions in Banks: Time for a Change?
Banks face increasing pressure to maintain effective compliance programs, but many struggle to keep up with the demands. In this article, we’ll discuss the current state of compliance functions and provide recommendations for improvement.
Pressure Testing Compliance Programs
Regular Evaluation Key to Success
To ensure that compliance programs are working effectively, banks must regularly test them. This involves evaluating the program’s design, implementation, and outcomes to identify areas for improvement.
- Benefits of regular testing:
- Identifies weaknesses in the program
- Ensures that the program is aligned with regulatory requirements
- Provides opportunities for cost savings and efficiency gains
Embracing Agile Ways of Working
Speed, Efficiency, and Independence
Compliance functions can benefit from adopting agile ways of working. This approach enables teams to be more responsive to changing circumstances, work more efficiently, and maintain their independence.
- Key benefits:
- Faster time-to-market for new products and services
- Improved collaboration with other departments
- Enhanced ability to adapt to changing regulatory requirements
The Future of Compliance: 5 Key Topics
Over the next three years, five key topics will shape the compliance landscape:
- Efficiency: Banks must develop specific use cases for automation and advanced analytics.
- Data Availability: Data-driven initiatives are needed to address current data shortages or low quality of data.
- Regulatory: ESG, 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.
- Comprehensive Risk Assessment and Oversight: Compliance and anti-financial-crime risk assessment will become increasingly data-driven.
Conclusion
The future of compliance functions in banks is uncertain, but one thing is clear: the current state of affairs is not sustainable. To make compliance functions fit for the future, banks must tackle these issues now. By embracing agile ways of working, regular testing, and investing in the right people and technologies, banks can ensure that their compliance programs are effective, efficient, and independent.