Today’s compliance teams are experiencing rapid change. Not only are we living in a time of fast-moving technological innovation and evolving legislation, but the global COVID-19 pandemic has resulted in a dramatic shift in daily life for many professionals. We have all been pushed outside of our comfort zones. Now more than ever, financial firms need to adjust their compliance risk management practices to adequately respond to changes that include a more competitive and expanding marketplace, added regulatory requirements, and an increasingly remote workforce.
We recently spoke about the transformations that many compliance teams are currently facing with David Cowland, former lead of the RegTech program at Fidelity International as Head of Compliance Operations. Cowland now advises firms on a variety of areas that include strategy, financial services, operations, and technology.
Cowland sees firsthand how RegTech is still a new concept for many financial institutions. “Compliance teams don’t understand how RegTech can help lift what is increasingly becoming a heavy load,” he says. RegTech is evolving to help firms effectively manage compliance, and it is up to compliance teams to understand the landscape. Cowland shares a few tips & tricks to help teams get started.
Adopting a Proactive Approach to RegTech
When it comes to implementing RegTech, Cowland urges teams to address root causes and adopt a proactive approach, versus a reactive one. “You have to target the operating model and focus on the overall process, not just the specific changes to regulatory requirements. Otherwise, you’re only introducing a temporary fix,” he explains.
With the use of RegTech, a firm’s main goal should be to manage compliance as efficiently as possible. Cowland suggests that compliance teams focus on the entire user journey and avoid thinking in individual silos. “Rather than replace multiple spreadsheets with multiple applications, firms should look at how all of the platforms’ functions fit together to ensure that RegTech is used in the most effective manner.”
Reframing the Role of Compliance
Any major shift in a company’s operations is going to call into question the abilities and value of top management. Chief Compliance Officers can ensure that they are bringing value by leading with a proactive and forward-thinking approach to compliance management. This means projecting how compliance issues may directly impact the company as a whole and discussing what top-level decisions should be made as a result.
One way to support this approach is by using data analysis to project changes before they happen, and strategically plan responses. Cowland adds, “Compliance needs to be multi-disciplinary. Teams must be more well-rounded with individuals that have specific operational, technological, and analytical skills and an experienced CCO on top, overseeing the team and building insight based on the data collected.”
Pivotal Changes Require a New Way of Thinking
The hardest part about change is the human aspect. Cowland notes, “Adapting to change is difficult for most people. Onboarding new technology is not that complicated, but the biggest challenge is shifting the cultural mindset of an organization. Every company needs change leaders to pave the way.”
Whether changes are temporary or permanent, firms should consider how its employees will be affected. It is important to allow time to adapt and embed change within the workplace culture from the inside out.
Considerations may need to be given to how employees learn, work, and interact. While there may be a focus for firms on long-term changes to compliance operations over the next five to ten years, firms should not wait too long to begin. “2025 will be here before we know it and regulators are expecting you to start now,” Cowland says.