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Bank
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Community Bankers Association of Illinois
codes, regulations and changes, as
well as the institution’s compliance
policies, affected products, activities,
staff responsibilities, dates and more.
Each program should be linked to
the specific laws that govern it and
the platform should orchestrate the
workload between workers.
The result is mass simplification: a
consistent series of online to-dos,
prompts, rules and clicks that reduce
time to compliance by as much as 90
percent. Reporting simply becomes a
byproduct of the process. This allows
banking staff to spend time serving their
communities instead of chasing paper.
Change How Change Is Managed
The only certainty in compliance is
change. So, why do banks – community
banks, in particular – struggle to
manage it?
In today’s banking environment, there is
no more dangerous sentiment than “this
is the way we have always done things.”
It has cost banks dearly on many fronts,
ranging from branch performance to
mobile banking. And, when it comes to
compliance, this outlook is proving to
be equally destructive.
The volume and velocity of compliance
changes are getting greater and greater.
How institutions manage change is
key to keeping compliance costs and
resource requirements in check. With
compliance, the work is never done.
Banks can’t simply define their programs
and execute. They must have an efficient
way to manage new requirements and
changes to existing programs.
Institutions need to engineer a system
that enables them to quickly identify
regulatory changes and clearly determine
which of the bank’s practices will be
affected. The system must also allow
them to efficiently perform and monitor
any necessary change tasks. In many
cases, this comes down to workflow.
A bank’s compliance program and
systems must support a strong
workflow that streamlines the process
of identifying work that needs to be
done, assigning that work to those
responsible for doing it and managing
the task to completion. This will
enable banks to efficiently manage the
onslaught of regulations without adding
more people (thus, cost) to the mix.
Improve Visibility for Everyone
The work of compliance is not relegated
to one officer or team. It’s an all-hands-
on-deck endeavor that extends from the
teller line to the boardroom. But even
those organizations that deploy a team
approach struggle to achieve compliance
visibility. There’s simply no way to keep
enough eyes and minds on the rising
complexity of regulatory requirements.
Gaining visibility of all compliance
activities, and reporting them reliably, is
key to meeting examiner expectations.
Manual compliance programs will
never be adequate for delivering on
these challenges. What’s required
are the technology-enabled tools that
automate the information sharing and
alert-notification process.
The visibility, transparency, and
accountability made possible by
these tools can dramatically reduce
oversight and eliminate risk. Examiners
and auditors benefit from being able
to quickly see that the institution’s
compliance methodology is orderly,
consistent and comprehensive.
Reduce Variable Costs
A typical $100-million community
bank spends more than $100,000 per
year on regulator-compliance activities.
At the current rate of increase, that
expense will grow to $200,000 in 2017
and $300,000 by 2020. When the
full consequences of Dodd-Frank are
factored in, the high mark can easily
reach $400,000.
It’s clear that this trajectory is untenable.
Unless institutions want to collapse
under the burden of cost, they must
identify and gain visibility of the elements
that are driving compliance expenses.
In the last few years, an entire support
industry has emerged to capitalize on
the regulatory challenges of community
institutions. A bevy of businesses,
hourly consultants, and seminars are
at the ready to interpret, outline and
discuss what new regulations mean.
But, do they actually help to get the
work done? Not really. These sources
rarely inform banks of the exact steps
that need to be taken to achieve
compliance. More often than not, they
add to the cost and confusion instead
of reducing it.
Bank executives should be asking the
following questions to help identify
where to cut costs:
• At what cost is compliance being
achieved (or not) today, considering
staff time, management time, audit
expenses and training costs?
• Are tasks being done right, in a
timely manner?
• What’s the financial impact of
penalties?
• Is there a better, more economical
way to manage and enforce
compliance?
Final Thoughts
Community
banks
have
been
persuaded that the cost of compliance
is unpredictable and cause for panic.
While the task of compliance should not
be underestimated, banking executives
must take a more rational and process-
driven approach. Standardization,
automation, change management, and
visibility go a long way in bringing
confidence, order and discipline to
chaos. By building a compliance-
management program on these tenets,
community banks can retake control of
their regulatory spending.
n
Continuity Control is a preferred
service provider of Community
BancService Corporation.
Greenawalt can be reached
at
,
or 888/932.6759, x101.
