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Compliance Burden Increasing, But Bankers Donít Feel It

Despite a slew of new regulations last quarter, community banks seem to be getting better at handling new compliance requirements.

With 82 new regulations taking effect last quarter, the number of hours and employees needed to meet compliance demands increased 26%, according to the Banking Compliance Index from Continuity Control, a compliance management solutions provider for community banks. But banks report feeling less strained by compliance requirements, even with the pace of change in regulation accelerating, Pam Perdue, executive vice president of regulatory insight at Continuity Control, said.

“Anecdotally, bankers have been telling us that they feel like there’s less of a burden… People have a higher tolerance for regulatory change now. We’ve been dealing with a high rate of change for a while,” Perdue explained.

[For more on regulation and compliance, check out: Report: Most Credit Card Customers Still Don’t Understand Key Terms]

With the economy rebounding, and that higher tolerance for change, banks are feeling more optimistic about their business and ability to meet regulatory requirements. They’ve also learned important lessons in dealing with the implementation of new regulations over the last few years.

“In compliance, banks have been learning new techniques to handle change better. They have a better understanding of how to leverage outside resources, and they’re adopting new technologies slowly. And they have a better understanding of what regulators are expecting from them,” Perdue observed.

While banks have gotten better at handling compliance demands, the challenge now is to adopt a systematic approach for dealing with regulation and compliance. “While you might turn away from a regulation-by-regulation approach in compliance, now there’s a need to turn attention towards the culture and infrastructure that you have supporting compliance,” Perdue advised.

Another challenge is the growing cost of compliance staffing. Compliance professionals are in high demand, and wages are going up with unemployment decreasing and the economy improving, Perdue noted.

Those higher staffing costs played a big part in the overall cost of compliance increasing by more than $45,000 last quarter, according to the Banking Compliance Index. As 82 new regulations came into effect last quarter, the average community bank had to devote 653 more hours to compliance, the equivalent of 1.86 full-time employees.


Jonathan Camhi has been an associate editor with Bank Systems & Technology since 2012. He previously worked as a freelance journalist in New York City covering politics, health and immigration, and has a master's degree from the City University of New York's Graduate School ... View Full Bio

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Becca L
Becca L,
User Rank: Author
10/30/2014 | 5:25:59 PM
Re: automation
At some point, after years of building systems and reporting analytics there has to be some redundency, some economics of scale. I'm glad banks are finally reaching that tipping point.
Greg MacSweeney
Greg MacSweeney,
User Rank: Author
10/30/2014 | 8:09:19 AM
It is good to see that automation is helping banks comply. It's not surprising, however. Banks have been pounded with new regulations for the past 6 years. They couldn't survive if they do everything manually.
User Rank: Author
10/29/2014 | 10:10:50 AM
Small bank burden
This is good news for community banks. Embracing more automation is definitely one way to decrease the amount of time spent on regulatory paperwork.
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