Compliance.ai

If we hop in our time machine and travel back to 2008, there were an average of 10 regulatory changes published by federal agencies relating to financial regulations, per day. Fast forward to 2016, and we see the pace increasing to over 200 changes per day.

Financial institutions that want to properly manage such changes are forced to staff up, allocate additional resources, determine how relevant they are to the business, assess the risks associated, perform a gap analysis to decide whether any of these proposed changes need to be applied to internal policies and procedures, then create an implementation strategy and timeline to meet the requirements by the effective date. (Yuille, 2017).

Properly processing incoming regulatory changes often involves a complex workflow; consisting of a collection of tasks, actions, and deadlines, with dependencies across business departments, and often requiring cooperation between multiple stakeholders in the organization. Without adequate processes, manually tracking, monitoring and implementing these changes is a daunting challenge. Especially because compliance teams need to not only ensure that compliance is met by the key regulatory deadlines but also to make sure the backlog of changes doesn’t pile up. The complexity of managing these various workflows manually has left companies scrambling to deploy tactical and resource intensive fixes to each new wave of regulatory reform.

A recent study from Cordium and Aite Group suggested a “lack of manpower and a steady pipeline of compliance deadlines” helped explain why only 4% of respondents felt they had an entirely strategic approach to regulatory reform, while 46% said their approach was either entirely or mostly tactical.

In today’s regulatory environment financial organizations simply cannot view compliance as the sole responsibility of one person, like the compliance officer. It often requires company-wide support – including front office, management, and technology teams – so that any new requirement can be implemented in the most effective way possible. Within compliance departments, regulatory change management is often broken down into tasks related to a particular aspect of the business or operational topic (AML, Lending, Privacy, etc.). For example, depending on the size of the organization, typically at least one person is responsible for aggregating and compiling a comprehensive list of regulatory changes on a daily basis, then another person is responsible for coordinating the analysis of such documents, another group tasked with reading and analyzing those documents, then yet another person is tasked with conducting an internal gap analysis, and lastly, another team is responsible for the implementation strategy. If you then consider the volume of regulatory changes and the collaborative requirement for processing new regulatory changes internally, you can imagine the overwhelming, highly time sensitive and continuous process of regulatory change management within a financial organization’s compliance team.

While such manual compliance processes are burdensome, if managed efficiently, they can offer opportunities to drive process improvement and reduce operational risks. Unfortunately, re-engineering the various business processes to address regulatory reform is much easier said than done. Merely defining compliant operating policies is just one part of a much larger puzzle. The bigger challenge is making sure those policies translate into standard operating practices. To achieve it all requires a cycle of ongoing education, training, and monitoring (Schwartz, 2018).

RegTech solutions recognize the strategic role that technology can play in automating manual processes and minimizing the burden of regulatory change management. As the financial regulatory landscape has expanded exponentially in recent years, companies are increasingly turning to regulatory technology to fill compliance gaps, reduce the cost of staying compliant, stay ahead of requirements before deadlines, streamline workflows, increase efficiencies and detect risks before the regulators do. Banks are starting to leverage software for regulatory reporting, regulatory intelligence, maintaining audit trails and workflow automation. This has helped banks save time and money on manual compliance tasks and reduced the operational risks associated with meeting compliance and reporting obligations.

Automated workflow solutions connect regulatory content and the change management process to organizational structures, policies, risks, and control frameworks, thus streamlining the effort of compliance teams.

For example, a regulatory change management solution can automatically detect the business or operational topics associated with an incoming regulatory change and also determine the key dates (comment close and effective dates) for that update.

Knowing the organization’s team structure and roles, the solution can automatically assign tasks to relevant parties, apply the related deadlines and then prioritize the task across the other regulatory demands.

The solution can restrict automated workflows to specific document types, from specific sources, and within specific jurisdictions. Various rules can be applied to automatically assign such tasks to the responsible team while also allowing compliance and business managers a dynamic view of the teams status and progress on the tasks within the allotted timeline. This increased visibility improves planning and allows for much more accurate resource planning.

Automated workflow in RegTech serves as a coordinated and efficient method to connect the various aspects of the compliance management process, both within a team and throughout the organization. RegTech solutions can address a wide range of challenges to simplify and optimize compliance functions, reduce complexity and cut costs. Such solutions enable compliance teams to more effectively plan and allocate resources in order to respond to future regulatory changes.

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Compliance.ai provides financial compliance teams with a simple and modern solution for regulatory change management. The Team Edition allows for workflow and collaboration, automated task management and highly customized notifications and alerts on regulatory content across Federal and State-level agencies.

Request a demo of the Team Edition by emailing: support@corp-stage.compliance.ai

Into the Future of Regtech | Streamlining Regulatory Change Management with Automated Workflow

Asif Alam

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