The Role of Technology in Compliance
The scope of regulatory requirements in the banking industry continues to broaden. Regulation used to be something that firms complied with or reported on; they didn’t contend with it directly from a strategy and competition standpoint, opines Cubillas Ding, research director at Boston-based Celent.
In planning and executing to technology initiatives for risk management and regulatory change, business and IT leaders should ask pertinent questions, says Ding. These include:
-- Where should we orchestrate the various regulatory and risk initiatives? -- How significant are the synergies linking projects? - What technology “bets” should a firm be placing, and when? -- How can we maintain flexibility and explore technology options to go to market faster (e.g., open source analytics, cloud deployments, joint R&D arrangements, venture capital, etc.)?
"While the industry changes in the coming years, individual firms will face a high degree of risk and unpredictability in how markets, participants, and clients will respond," notes Ding. "Firms would do well to equip themselves to discern risk more clearly and to develop sustainable mechanisms for decision-making."
Timothy Burniston, VP and senior director, regulatory consulting practice, atWolters Kluwer Financial Services believes there are three important steps institutions can take to prepare themselves for 2013 and the regulatory and supervisory deluge to come:
-- Creating a strong compliance culture driven from the top by the board of directors and senior management is essential. Regulators expect it, as do other stakeholders.
-- Taking the time to understand and apply the consumer-centric risk rubric that is reshaping supervision. Compliance has gone well beyond just adherence to technical requirements and reaches into the features, terms and administration of products and services across their entire lifecycles.
-- The need for data analysis to be a core component of every institution’s effort to ensure compliance and to safeguard its reputation. For example, the analysis of consumer complaints opens a new dimensional portal to perceptions about customer relationships. Further, analysis of lending data gives an institution insight into the success or failure of efforts to reach all segments of its local community.
"The cold reality is that regulators, as well as consumers, with access to more data than ever before, are making it a point to use available information to drive their agendas," he adds. "This should incentivize institutions to get ahead of the curve by knowing what their data says about them, and to tell their story before someone else does it for them."