7 Ways to Cut Compliance Costs & Still Stay Compliant
After years of rising costs, many financial institutions are looking for ways to limit or even cut compliance budgets. The average financial institution spends about 5 percent of its overall budget on compliance, according to the 2019 ABA Survey of Bank Compliance Officers Report.
Yet compliance departments struggle to get the job done with current resources. Two-thirds of compliance officers name “not having enough time to manage regulatory compliance” as a major pain point, according to a recent Ncontracts survey.
Many compliance officers report they:
- Don’t have enough staff or resources
- Don’t have the right tools
- Don’t have the support of other departments
How can financial institutions reduce the cost of compliance and still remain compliant? It takes a combination of creativity and practical thinking. Here are six tips to help you:
- Use experienced compliance staff for tasks that require their specialized knowledge, experience, and judgment. Compliance hires are expensive. Their time and talents are best spent on activities that can only be done by a compliance professional. When they spend time nagging staff to complete tasks, figuring out if tasks were completed, and collecting documents to prepare for an exam, that’s less time for big-picture compliance work. Repetitive administrative tasks like these waste a lot of time and can easily be automated, freeing up your compliance department to tackle major initiatives.
- Invite compliance to strategic planning meetings. Don’t waste time coming up with a new product or service idea without looping in compliance. Compliance officers that constantly say “no” when asked if the FI can do something often do so because they don’t have the time to find the gray areas in the regulations or find innovative ways to deliver solutions. More time for the compliance officer can lead to better solutions and rule interpretations that will give you a competitive edge.
- Prioritize training. It’s easy to misinterpret regulations and guidance. Compliance is a tangled web of legal documents, regulations, and guidance. When there’s no time to analyze documents, compliance can get it wrong. Training provides unique insights from peers. When compliance officers don’t get time for ongoing training, they can get it wrong.
- Shop around for compliance-related disclosures that require regular updates. Some form providers may charge you thousands more than a compliance attorney just to change a few sentences. It’s worth the time to look around for a cost-effective and compliant solution for disclosures.
- Leverage the costs paid by one department or team to help other departments and teams. Bankers often wear many hats. Technology solutions can often do the same. Use the compliance department’s Redlining Analytics tool to provide market insight to the marketing team. Use marketing’s social media monitoring tool for tracking brand mentions to identify potential complaints. Get creative and find new ways to use existing tools.
- Fully utilize your compliance management system (CMS). If you’ve purchased compliance management system software, ask yourself if you are using its full functionality. A small investment in additional training for your department or other staff at the FI can increase utilization, making your FI more efficient and collaborative and giving you greater bang for your CMS buck.
An automated CMS can allow an FI to:
- Empower other depts to do basic regulatory research.
- Create workflows to allow other depts to conduct QA or compliance reviews of their processes.
- Automate reminders, task tracking, and audit trail.
- Centralize compliance/risk management tasks.
- Don’t be short-sighted during the downturn. Many FIs are looking to cut costs during the pandemic, but bankers know better than to be penny wise and pound foolish. Cutting the compliance budget can result in short-term savings but can cause long-term damage. Overworked compliance staff can burn out trying to keep up with manual processes. They will be more likely to make unnecessary compliance mistakes that will hurt the bottom line and the FI’s reputation in the long run.
Ncontracts is celebrating National Compliance Officer Day all month long. If you’re interested in learning how we can make your life easier with our automated CMS, we invite you to schedule a demo.