Summary
What this article covers in 30 seconds
- Global banking firms were reported to be reducing or planning to reduce compliance headcount to lower costs.
- The trend followed a slowdown in fines after global banks paid $321b for regulatory failings.
- RegTech can automate tasks such as KYC checking, regulatory reporting and activity monitoring.
- Recordsure argues technology should complement human expertise and help teams focus on the highest risks.
Are the days of large compliance teams numbered? They are unlikely to disappear completely, but recent research suggests the period of rising numbers and cost may be ending.
According to business-standard.com, a number of global banking firms were reducing or planning to reduce headcount in compliance functions to reduce costs.
This followed a slowdown in fines for regulatory failings since the financial crisis, during which global banks paid $321b for failings and increased compliance staffing as they tried to remediate past poor behaviours.
The reduced need for larger numbers of compliance staff suggests major banks are learning from past mistakes and putting systems and processes in place to manage risks and meet regulatory expectations more efficiently.
Technology and compliance expertise
Technology is being embraced as a way to reduce costs, meet regulatory requirements and improve efficiency. From automating Know-Your-Customer checking to regulatory reporting and activity monitoring tools, innovative RegTech solutions can replace many tasks previously undertaken by compliance professionals.
Recordsure’s view is that focusing entirely on cost reduction is not the right approach. Technology can automate many processes now undertaken by humans, but it is far from replacing humans altogether. Experience and human judgement remain necessary, particularly when dealing with customers who do not fit the standard customer model.
The better approach is to use technology to create efficiency, reducing menial tasks so the workforce can focus on risks that pose the greatest threat to customers and the business.
Augmenting monitoring teams
Whether firms reduce the workforce and review at current levels, or retain the same numbers and increase coverage, depends on business drivers and appetite. Recordsure’s experience is that many firms benefit most from improving risk mitigation capabilities rather than simply maintaining them.
Recordsure is designed to complement existing compliance and monitoring functions by recording and segmenting customer interactions, flagging key risk factors and providing insight that can be used to mitigate compliance risk and maximise customer experience outcomes.
By flagging specific areas of risk, Recordsure reduces monitoring times and operating costs while enabling teams to focus on the interactions that pose the greatest risk.
The future of compliance teams
The future of the industry will combine technology and compliance experts to create greater efficiency and reduce costs while improving compliance and customer outcomes.
That may mean fewer compliance professionals in the long run, but the intended result is better outcomes and experiences for customers.
Frequently asked questions
No. It says they are unlikely to disappear completely, although rising headcount and cost may become a thing of the past.
A slowdown in fines after the financial crisis and banks’ efforts to reduce costs followed a period of increased compliance staffing.
RegTech can automate tasks such as Know-Your-Customer checking, regulatory reporting and activity monitoring tools.
Experience and judgement remain important, especially when dealing with customers who do not fit a standard customer model.