Driving Down the Cost of Compliance

Driving Down the Cost of Compliance

For a long time, financial institutions have been struggling with the need to achieve profit and growth targets while meeting increasingly complex and stringent risk management and compliance targets. This challenge isn’t new but when we combine these historical goals with direct pressures to reduce costs and rationalize spending on compliance initiatives, the traditional model for running a successful fraud, AML or compliance program is challenged in a way it hasn’t been before.

Over the past several years, banks have had to deal with a growing number of regulations. The increase in and volatility of these regulations have created far-reaching operational challenges. With regulatory change programs often accounting for the largest percent of “Change-the-Bank” budgets, the ability of financial institutions to ad-dress customer needs and grow their core business has become increasingly difficult. Despite insights gained from coping with and managing regulatory change, most banks still lack a holistic framework or methodology to respond to these regulatory issues. Instead, banks take a reactive approach to regulatory response. As a result, as regulators continue to increase their scrutiny of banks, monetary fines imposed as a result of enforcement action are growing exponentially.

The new paradigm

Today, as executives survey their far-flung compliance capabilities and IT operations, the question weighing on their minds is “What’s next? How can we improve business agility and lower compliance costs so we can focus on core business needs?

The complexity, variability, and velocity of changing business requirements and external risks have typically negated the benefits derived from relying simply on lower cost outsourcing firms that provide   a broad range of generic IT support capabilities. Rather than general IT Out-sourcing, that works best when applied to a highly standard set of repeatable processes and application technologies, Matrix-International Financial Services (Matrix-IFS) believes that there are four critical components to ensure business agility and reduced compliance costs.

  • First, access to an outsourcing / partner company whose core business is compliance IT systems architecture, implementation, and management services. A firm that has the size to provide support services via a global onshore / offshore footprint, utilizes an integrated delivery and managed services process, and has the ability to draw upon an internal staff of trained compliance technology resource.
  • Second, access to a pool of domain experts who have knowledge of compliance regulations, banking processes and data, and firsthand experience architecting and deploying leading market-based compliance solutions and who are able to share best practices and lessons learned from solution upgrades and deployments.
  • Third, access to a partner company who has the expertise and experience to compare and assess bank data and compliance business requirements against market-based compliance / fraud solutions, and can provide workable out-of-box upward compatible solutions to fill gaps until vendor product upgrades are available and can be implemented.
  • Fourth, access to a partner company who likewise has strong working relationships with the leading market-based compliance / fraud risk solution providers, and who are able to work collaboratively to ensure continuous improvement and capabilities of compliance products.