Bankers need to find ways to make the industry faster, more efficient and most importantly, cost effective.
The need for cost effective efficient solutions is particularly true in one high cost area of banking, regulatory compliance. Since the 2008 financial crisis, the cost of compliance has been rocketing upwards due to a wave of new regulations. Regulatory technology – regtech – may be the industry’s best hope for managing those spiraling costs.
Bankers are beginning to see the advantages of big data and analytics-based solutions when they are utilised alongside compliance. For example, there are a growing number of banks that are utilising new technologies to automate the immense data collection and processes needed to file the proper compliance reports. New technologies could help regional and community branches direct data aggregation for regulatory compliance.
Smaller banks are looking to associate themselves with companies that can help in building a data driven approach to compliance management. More than four fifths of community banks have reported that the costs of compliance has risen by at least five percent, due to regulations like the Dodd-Frank Act. These spikes in expenses are causing many of the smaller businesses within the industry to seek out merger partners. Banks where compliance costs are high and there is a case to spend a vast amount of money to bring their in house technology up to date are also likely the same banks that will be looking for a merger partner sooner rather than later.
Share on LinkedinShare on TwitterShare on Facebook I was having a discussion about the future of banking with some fellow investors recently and one of my younger and more tech savvy associates opined that fintech companies would soon make traditional branch banking obsolete. It is a provocative idea but I am pretty sure he is [...]
While banks are looking to make the compliance process more efficient and cost effective, they should also be aware that regulators are promoting a higher level of interest in the industry’s data collection and management systems as well. A recent report from the firm Deloitte states;
“[In] recent years regulatory reporting problems across the banking industry have more broadly called into question the credibility of data used for capital distributions and other key decisions. The [Federal Reserve Board] in particular is requesting specific details on the data quality controls and reconciliation processes that firms are using to determine the accuracy of their regulatory reports and capital plan submissions.”
There is an ever increasing opportunity for technology companies to aim their efforts in developing REgTech solutions to regional and community banks. The increasingly excessive cost of compliance for many of these businesses place their continuation into question unless they should take action in the short term.
This is where technology providers can assist. Solutions such as Encompass can help banks to lower the transaction cost and time required in onboarding new customers by fulfilling banks regulatory and compliance needs.
Founded in 2011 by entrepreneurs Roger Carson and Wayne Johnson, and operating from the UK, encompass is the creator of unique, innovative Know Your Customer (KYC) software for banking, finance, legal and accountancy that enable better, faster commercial decisions. The company is driven by the belief that the best decisions are made when people understand the full picture.
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Contact us today to arrange your personalised consultation of encompass. Discover how our KYC automation software can help your business accelerate onboarding and give you peace of mind that you are regulator ready.