The Great Recession of 2008 not only taught valuable lessons to the Financial Services industry worldwide, but it also brought in a slew of regulations. This led to the compliance function growing manifold since then. The pandemic caused by Covid-19, however, drove the function into unexpected territory and is pushing firms to increase the efficiency of the function. While the Recession taught Financial Service companies to improve their conduct and resilience, the pandemic is making these companies transform their compliance function into a value-added service.

The Transformation Process encompasses the following:

Re-examine the mandate of the function – The compliance function involves outlining and maintaining the compliance framework, Regulatory Compliance, independent oversight of business, and managing conflicts of interest. To transform successfully, the mandate needs to be revised so that the function can challenge decision making while providing independent insight. Its impact needs to be made broader – to a business model level – so that it is capable of handling business-wide risks that may come up. This will also allow it to become more proactive in identifying and monitoring risk.

With a clear mandate and identification of expected outcomes, the compliance function would be able to deliver greater value, especially in times like these. The transformation also requires doing away with duplicity of tasks and clearly defining responsibilities so that there is no confusion over process ownership.

Functioning as a business partner – The compliance function used to be considered as an appendage to a business. It was taken to be a laborious activity that would only slow the business process down. Though compliance teams would be considered a part of a company, they would not be considered a business partner. This changed to a large extent for Financial Services companies during and post the Recession in 2008 when this function got integrated closely with the business. For the next phase of transformation, the function needs to support the business by becoming a strategic partner. It will need to adapt to changes in the business so that it can support and challenge it effectively. To be predictive instead of reactive, the function would require leveraging Data Analytics and technology.

Increasing efficiency via data and technology – It would not be outlandish to say that the transformation of the compliance process depends on data and technology. The desire for proactivity, as outlined in the previous point, cannot be achieved until the function leverages tools and technologies that can help it draw valuable insights.

This transformation can begin with using tools to improve the reporting process. This can lead to the standardization of the compliance process. BA Fintech has a tool known as COMPLIANCE iNBOX which can help companies do just that. It is integrated with a company’s financial accounting software and uses that data to help companies engage in Financial Analytics. This improves the proactive nature of the finance function and can make it a valuable business partner.

BA Fintech (a joint venture between Boston Financial Advisory Group and Avanze Group) has an excellent product known as COMPLIANCE iNBOX (CiB). It is a Compliance Management software that integrates and streamlines the approach to Compliance Management. It promises timely and accurate compliance without the typical cost and hassles associated with the activity. Its Dashboard provides a comprehensive view of the status of various compliances and audit activities across an entire business on a single screen. It generates dynamic reports which present information in the form of charts, tables, and data grids which greatly simplify the decision-making process for Promoters and senior personnel and lets them focus on the core business.

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