Banking Compliance is Becoming Harder – How Analytics Can Help

With a new regulatory alert being issued every 7 minutes, growing compliance regulations are challenging banking institutions in a variety of ways. Changing customer behavior, and the constant evolution of technology is compelling them to change how compliance is approached.

Ensuring compliance with a rising number of government and industry regulations can be hard-hitting and put a strain on the already drained resources. While traditional compliance models were effective for an era where simple enforcement was sufficient, today, they offer a limited understanding of business operations and underlying risk exposures. With the risk of regulatory sanction, reputation and financial loss, due to a failure to observe compliance obligations becoming extremely far-reaching, those who adapt best are the ones to enjoy a distinct competitive advantage.

As each new industry regulation and its associated deadline causes a massive influx of new data that has to be stored and analyzed, garnering insights rapidly becomes vital for optimizing processes and pinpointing any potential problems areas. With compliance costing businesses $5.47 million annually and non-compliance $14 million, analytics is enabling organizations to keep pace and avoid the risk of costly non-compliance. It is helping banking organizations to stay ahead of compliance requirements, and better anticipate and respond to change.

Here’s how analytics can help with banking compliance:

• Unearth reporting insights: Institutional banking clients, as well as regulatory auditors, constantly demand banks to reveal risk and possible exposure scenarios. Real-time analytics is a critical aspect here that allows banks to handle high volumes of data and unearth insights that meet the growing compliance needs. Using analytics, organizations can collect and distribute necessary compliance data to deliver reporting insights that are required throughout the enterprise, and meet regulatory requirements with ease.
• Improve risk control: Since non-compliance can result in substantial losses, analytics can help scale up the computational power of risk management. Decision-makers can ask more complex questions and get more accurate answers faster while developing new business strategies. Analytics-aided techniques can produce more accurate regulatory reports and deliver them more quickly. Since the need to pre-aggregate data is eliminated, risk managers are in a better position to understand the nuances in data, reduce fraud losses, and improve risk control across the enterprise.
• Enhance productivity: As banks need to be always ready to provide regulators with a quick response to regulatory stress tests, analytics plays a big role in making processes faster and more effective. Using advanced analytics, organizations can achieve faster and more accurate responses to regulatory requests and give teams analytics-driven decision support. Banks can use analytics to understand compliance levels across the enterprise, identify avenues that fare poorly, and take measures to enhance productivity and save money.
• Drive agility: With thousands of new regulatory requirements being ushered in every year, manually managing compliance activities is a fruitless undertaking. Manual compliance efforts are not only cumbersome and tedious, but they are also extremely prone to error. This increases the degree of risk and limits a company’s ability to meet growing regulatory requirements. Analytics allows organizations to better manage risk and compliance obligations; by aggregating data that’s needed from across the business, analytics paves the way for greater reporting accuracy and efficiency. Using analytics, organizations can respond quickly to the evolving regulatory landscape, and drive agility.
• Lower costs: With massive legacy and personnel costs going towards regulatory and financial reconciliation, firms have a pressing need to comply at a lower total cost of ownership. Since regulations and the market environment greatly hamper banks’ abilities to just throw money at the problem, analytics helps drive improved metrics and reporting through automation. Banks can transform raw data for cognitive and analytic processing, meet regulatory needs at a fraction of the costs, and drive higher efficiency.

Effectively manage compliance

Banking and other financial services companies have to contend with a variety of industry regulations and compliance requirements. As the time and cost of regulatory compliance and reporting vastly increases with every new regulation, keeping up is a great cause for additional stress – especially at a time when new competition and increasing customer demands is creeping from the sides.

Advanced analytics is enabling the banking industry to become smarter in managing the myriad challenges it faces – by offering compliance officers enterprise-wide intelligence, analytics can help avoid financial non-compliance and stay a step ahead. Analytics-backed solutions are enabling banks to not only manage the increasing cost of compliance, but also the risk of non-compliance – both monetary and reputational.