How can you balance control and growth in compliance? Get future-ready.
December 7, 2021
We’re beginning to see risk leaders participate in growth and value-adding initiatives in ways they haven’t before. A full 76% of Chief Compliance Officers (CCOs) who responded to Accenture's recent survey said that their most important goal is to balance existing duties with new value-adding activities.[i] This means that leaders managing operational, financial, regulatory and compliance risks must navigate the tension between controls and growth.
Most CCOs also agree that operational risks (37%) and disruptive technology risk (34%) are now bigger focuses. This is understandable as compliance leaders must navigate tightening regulations, the shadow of fines and reputational damage while using new technologies and collaborating with third parties more than ever before.
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76%
Of CCOs said that their most important goal is balancing existing duties with new value-adding activities.
77%
Of risk leaders believe that more complex and interconnected risk is coming at them faster.
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Getting stuck in vicious cycle
In our discussions with compliance leaders, we’ve learned why getting this balance right is so elusive right now. For one, managing risk is trickier than ever. Most (77%) of the risk leaders surveyed think that more complex and interconnected risk is coming at them faster[ii] and more than half of the CCOs surveyed are not confident in their risk function’s ability to conform with new regulations relating to consumer privacy and data protection.[iii]
On top of this, there’s the age-old dilemma of mounting pressures and shrinking budgets. It’s another tough balancing act amplified by the pandemic. Many compliance leaders simply don’t have the funds to invest in enterprise risk management platforms. And those who do aren’t getting full visibility into thier risk. The end result? Organizations inadvertently end up creating more risk for themselves. It’s a vicious cycle. More risk exposure means more focus on reactive firefighting, which makes the pivot to value-adding activities a no-go.
What’s happening with banks’ compliance functions is a perfect example to unpack.
The case for future-ready banking operations
Compliance leaders in banks need particularly to strengthen and integrate all lines of defense as Anti-Money Laundering and Know Your Customer regulations multiply. The answer is future-ready operations. Banks that achieve future-ready maturity have the agility and resilience to optimally manage risk. And as an added benefit – their market valuations, on average, were 18% higher than less digitized peers in 2019, and 27% higher in 2020.[iv]
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A marathon, not a sprint
How do banks get compliance operations from their current state to a future-ready one? It won’t happen overnight. Compliance will need to make tactical and strategic changes across technology, talent, processes and data to transform operations. Here’s what they can expect along the way:
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Technology
Disparate technology systems are an Achilles heel for compliance risk management in banking. Banks with the lowest operational maturity manually cobble together reports, culling data from systems that don’t talk to each other. By combining robotic process automation (RPA) and infusing analytics driven AI/ML with workflow capabilities, compliance teams can remove the guesswork and generate better reports faster and more often. The evolution to more predictive ways of working starts by introducing third-party data to enhance the 360° view to truly understand risk levels and act sooner. Future-ready compliance functions have enterprise risk management platforms that ingest all aspects of data and all types of intuitive reporting, proactively identifying risk exposure.
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Talent
The journey to future-readiness hinges on the skills of the workforce. For years, banking compliance professionals have worked in manually-intensive ways. Now there is a new generation digital-savvy professionals. They can code, leverage analytics, embrace working with machine and can correlate behaviors and risk potential. The more future-ready banks become, the more they will rely on these skills. The challenge for leaders goes well beyond recruiting and reskilling. They need to champion a mindset shift that brings these worlds together and supports a modern, digital compliance function that works at the pace of change.
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Process
Digitization is wasted without process re-engineering. This means optimizing process flows, control checkpoints and handoffs before any new technology is applied. Once compliance processes are rationalized and streamlined, banks can progressively apply more automation and machine learning tools. First selectively, then widely, and ultimately, from end-to-end. The goal is a future-ready compliance function with proactive control management, fully optimized processes and humans working alongside machines on value-adding tasks. The good news is that it’s possible to make changes in stages without disrupting day-to-day operations.
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Data
As compliance leaders look to smash silos, aggregate, analyze and leverage diverse data at scale, they sometimes lose sight of a fundamental principle. You’re only as good as the quality of your data. Whether it’s instrument or benchmark data or some other third-party data source, compliance teams must ensure they have the right data sources they can trust to avoid blanks and false pictures of risk exposure. That’s why banks with future-ready compliance operations prioritize data quality, new data modeling and appoint a data steward who owns the data to ensure continuity of good data practices. It’s how they create a single source of truth that underpins all they do.
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If there were ever a time for compliance leaders to boldly reinvent operations, we believe that time is now. After all, the pandemic taught the world something that risk leaders have always known. Risk is not just about what could happen one day. It’s about what is happening every day. The more future-ready your operations are, the better positioned you are to tackle what the day brings.
Where is your organization on its operations maturity journey today? Find out using our quick diagnostic tool and contact us at robert.j.bradley@accenture.com or li.c.zheng@accenture.com. We are happy to answer any questions you may have about how your organization’s operating model score against the four levels of operations maturity Accenture has identified.
[i] Accenture 2021 Global Risk Management Study, 2021
[ii] Accenture 2021 Global Risk Management Study, 2021
[iii] Accenture 2021 Global Risk Management Study, 2021
[iv] Elevate every decision with intelligent banking operations, 2021
