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3 Tips for Transforming Your Regulatory Compliance: From Burden to Benefit (Part Two)

For banks, the financial and manpower cost of regulatory compliance is growing at a staggering pace. As we noted in our last post, 3 Tips for Transforming Your Regulatory Compliance: Set the Stage for Success, currently, banks need to comply with 41 regulations at a combined cost of $780 billion annually. By creating a centralized compliance office, being strategic, and surveying stakeholders for preliminary document assessments, your bank lays the groundwork for meeting regulatory guidelines at a significantly lower cost to your manpower, and your financial resources.

But there’s more your bank can do. Your enterprise can change compliance from a regulatory burden to a beneficial process. Here are 3 additional tips to set you up for success in regulatory compliance, and to improve workflows and better manage risk.

1 - Build in flexibility

No one has a crystal ball that tells you everything your bank needs to comply with a regulatory request. As your compliance team undergoes processes, it may discover that critical data points are missing. It may find it went down a rabbit hole and needs to pivot.

Natural language processing harnesses the power of machine learning. It takes much less data to see if you are getting the information you need. With NLP technology’s significantly lower threshold, you can quickly shift—add fields, data points, and document types. Think of it as a stealth submarine gliding through a sea of documents—not a hulking aircraft carrier. When your compliance program needs to adjust, response time can be just a few hours, versus days or weeks.

2 - Leverage data for valuable insights

Financial institutions can look at the growing volume of regulatory compliance requests as the bane of their existence. Or, they can look at them instead as opportunities to gain useful insights. With an end-to-end sustainable compliance process, your bank can be positioned to glean data to improve business processes and workflows—and better manage risk. You can gain a thorough understanding of asset classes, geographies, and counterparties. Things that you never even thought of suddenly enter the realm of possibility.

Think about the upcoming phase out of LIBOR. The compliance issues surrounding putting in place a benchmarking alternative are also an opportunity for gaining insights into counterparties, asset classes, and contract processes.

When it comes to your qualified financial contracts, you can extract as many as 30, 50 or more data points and see how signature and authorization processes are handled across departments. Data collected in the process can provide insights into typical transfer restrictions, cross-default entities or terms negotiated with specific counterparties.Then, you can put consistent practices into place.

In both instances, you can see how your bank is interacting with counterparties and evaluate your overall risk. You can take a clear look at contract terms and evaluate where improvements can be made moving forward.

With a manual process, this level of granular insight would be unattainable—your staff is pedaling as fast as they can just to gather the data. There’s no time or manpower to take a step back and synthesize across departments, geographies, and contracts. When technology does the work, not only is compliance achieved faster, at less cost, and with greater accuracy: there’s built-in capability to extrapolate findings and increase transparency.

3 - Get started

Compliance regulations have tight deadlines. As mentioned, the LIBOR phase-out in 2021 and the January 2020 QFC deadline are just two sprawling examples. Request fulfillment typically takes more time than anticipated, which puts your organization in an uncomfortable and costly position. The sooner your bank puts the ongoing processes and technologies for regulatory compliance in place, the more flexibility you have to adapt.

It’s not unusual for a bank to spend two-plus years and engage 200 people to go through contracts. Compare that to an NLP technology-based process assigned to similar regulation—it can take just a few months, with 50 people at the height of the discovery, and fewer as the process winds down. This could result in an 85% reduction in time—and an 80% cost savings. Plus, your bank can retain all information and insights; these don’t walk out with a consultant.

Eigen is embedded in your front, middle, and back office to automate work streams. We work with some of the world’s most respected financial institutions. With our natural language processing (NLP) and deep understanding of regulatory compliance complexities, we process the full spectrum of documents, across all banking operations.

Talk to us about how we can assist your regulatory compliance office to minimize risk, reduce cost, and generate valuable insights.