Compliance Challenge

How many financial services fines have been levied on activities that banks wish they had not participated in?

Regret comes not from the scope of activities, but the manner in which they were undertaken.

These fines (and the associated investigations) identify areas where cultural (and/or infrastructural) weakness exposed the institutions to excess risk and eye-watering costs.

Knee-jerk responses may include:

- capitulation/withdrawal;

- over-compensation with incremental rules/surveillance/monitoring.

With cultural deficiencies laid bare, regulators insist on evidence of the steps taken to address the cultural issues — not of cultural change itself.

So COOs, CROs, CTOs, CDOs, CISOs become jointly responsible for the gargantuan task of monitoring or preventing behaviour. HR may get a mandate from the CEO to deploy a cultural transformation programme.

The costs are unmissable. They’re equally enormous and frustrating.

But the return on this investment will only become apparent at the next investigation. The scale of any shortcomings only obvious with the next fine.

Surveillance, Reporting, Visualisation — these budget-sapping activities do surprisingly little to address the real issue.

Culture.

Regulatory compliance should be neither a burden nor an aspirational target. It should be a weclome minimum. A barrier to entry which excludes those less willing to promote a stable system.

If banks want to stay in these businesses, they should focus less on surveillance / reporting and much more on effecting sustainable cultural change.

Creating authentic, stable and scalable organisations.

Organisations with the highest standards of service, efficiency and trust.

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