The Key To Compliance Management: Consolidation and Automation

by Ryan Getchell, on December 6, 2016

Financial institutions are subject to greater risk of regulatory action when they use manual procedures and spreadsheets to track compliance. Think about it: how many questions are you asked on a daily basis where you know the data is available, but you have to answer "I don't know" or come up with vague reply to get you off the hook? When these questions are asked, do you reluctantly go to those people that can get the data, knowing that they will be pulled off for hours compiling the numbers that should be an easy answer? While this approach may have worked in the past, it is becoming increasingly costly for financial institutions to operate this way.


Setting aside the human error that can be involved when manually manipulating data, the complexities that financial institutions are having to respond to is increasing every day. From having to provide numerous data sets in specific formats to multiple regulatory bodies to ever changing rules and decreasing response times, financial institutions must be proactive in setting up their data for success.

The solution is the consolidation of data and automation of compliance processes.


Consolidation of Data

Let's be honest, financial institutions hoard systems. While at the time every application may have been vetted and deemed an appropriate investment, they quickly get embedded in every day processes and are difficult to swap out for newer, more efficient technology. Integration between legacy systems therefore becomes tighter and tighter with each passing day. And then we have the proof of concept applications that a slick IT guy came up with that was only supposed to demonstrate capabilities and be replaced quickly, but now is so entangled in processing that to remove it would bring the whole house of cards down. Oh and they are probably built in MS Access... *shutter*

Sound familiar? Well it doesn't have to. The concept of data warehousing is to take the data as it stands, in whatever system, in whatever format and move it to one location. In the past, this process was deemed costly, slow, and only for the behemoths that had the IT budget to endure a multiple year endeavor. Data warehouse and cloud technologies have progressed to the point where automated source intake can be achieved for multiple systems in a matter of days and weeks rather than months or years. Costly hardware and the space to store all this data can now be quickly provisioned in cloud platforms such as Amazon Web Services (AWS), turning your data center into a server less and vastly more scalable environment.

Further, by colocating data in one central repository, data about your customers, products, etc. that was once strewn across multiple systems, can now be at your fingers tips.


The Next Step? Automating Compliance Processes

Taking this a step further, what if you could answer questions before they were even asked? Typically, financial institutions know the questions they will be asked during audits and to prepare...they commit dozens of resources to spreadsheets jockeying. By automating compliance processes, you can remove the manual steps performed by employees and increase your productivity. This automation can reduce exam time when the regulators come knocking. We are also seeing premiums being reduced for commercial liability insurance for those companies that invest in such automation. And it makes sense, by automating, you remove human error and standardize repeatable steps, repeatable steps that are transparent and traceable, words auditors love!

Why not answer these questions even when the regulators are not in the office? With dashboarding software such as Tableau, compliance metric visualizations can sit on top of the warehouse to provide daily answers to the questions you and your auditors want to know...automatically, without any man behind the curtain.

Lastly, compliance automation is quickly becoming a requirement and not a nice to have because regulators themselves are making better use of technology. No longer are auditors relegated to the random stab methodology, but using technology can profile vast amounts of data for that one transaction that hits on their criteria. This is also leading to an increase in audit frequency because auditors can crunch more numbers in a less amount of time. The idea of testing sample sets is quickly becoming a thing of the past.

How Do You Stack Up?

Audits and regulatory requests do not have to be a stressful time for financial institutions. While you have been getting by and perhaps passing your audits, the amount of data you steward will only increase and the number of calls on that data will only increase as well. Preparing now by consolidating your data and automating compliance processes is an investment in the future stability and decreased risk of your company.

Need help with consolidating and automating your compliance process? Contact us today!

Topics:Data ScienceData Analytics

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