Banks may need a new approach to address bank regulation and regulatory reform. The sheer size and scope of regulatory change means that interim measures may no longer suffice; instead, banks may wish to initiate a robust and sustainable regulatory change management model.
Properly designed and executed, such a model may increase efficiency and ultimately serve as a source of competitive advantage. Clear definition and assignment of roles and responsibilities is essential. Banks should become more adept at processing the flow of data related to regulations and at making regulatory change management a smoothly running part of business-as-usual operations.
Global financial services firms have developed three basic models for responding to regulatory reform:
Single ownership. The end-to-end regulatory change management process is owned and managed by a single group, starting with change identification and ending with closure validation.
Fully segregated. The regulatory change management process is coordinated and facilitated by a segregated group or groups within each business or region.
Federated model. A central function acts as the starting point for regulatory management, providing support in identification and impact analysis.
Each model has advantages and disadvantages; there is no industry standard, although the federated model has certain advantages for larger and more complex organizations.
There are a number of ways to make regulatory change management part of business as usual. These include:
Establishing robust regulatory monitoring processes;
Setting up consistent processes to document hand-offs of information and ownership;
Creating a well-documented cross-function and cross-product coordination process;
Employing scalable tools and processes throughout the organization;
Dedicating appropriate, empowered regulatory change resources;
Defining roles and responsibilities to increase employee engagement;
Building the right governance structures;
Using interactive technology to support workflow and communications;
Facilitating auditable supporting documentation; and
Reviewing, revisiting and adjusting as needed.
A holistic framework — supported by empowered resources, consistent processes, and appropriate technology — can help make regulatory change management run smoothly and effectively.