In today’s evolving and dynamic marketplace, financial organisations have to expand their scope and improve the kind of services they offer without losing sight of the industry’s ever-changing regulatory environment. Banks and other financial service providers not only need to be aware of their regulatory obligations but they also need to implement practical policies to remain in compliance with all relevant laws and regulations. This is especially important in the context of competition from FinTech startups.
What Compliance Laws Cover
Compliance laws generally cover matters such as the prevention of money laundering, the management of conflicts of interest, illegal conduct, terrorist financing, customer disputes, and more. Since banking laws change frequently, regulatory compliance has become a labour-intensive and complicated process. Banking institutions are therefore relying increasingly on the latest technologies such as data analytics to prevent compliance issues and deal with an already tough regulatory environment.
Big Data’s Benefits in Achieving Regulatory Compliance
Big Data offers a way for banks to keep up with changes in banking laws and make sure they achieve regulatory compliance in the industry through advantages such as…
Highlighting Compliance Risks
Fines and strict regulatory frameworks have increased pressure on banks and other financial organisations to achieve regulatory compliance quickly and promptly. Many banks have therefore adopted new technologies like Big Data to reduce their compliance risks and avoid related business process problems in real-time.
Data analytics allows banks to maximise the value of the data they store in their servers, apps, and relational database systems. It enables them to examine their data from both new and legacy sources and uncover compliance issues from new perspectives that could otherwise result in hefty fines and penalties. Doing so reveals the insights that are necessary to ensure they remain compliant with industry rules and regulations.
Tracking Discrepancies Easily
Big Data platforms can analyse and make sense of vast quantities of data much faster than any human could. Banks can use this information to make the right decisions relating to risk, fraud detection, and security. Data analytics can ingest and aggregate client and other data, build compliance reports, and uncover any discrepancies that may exist among various information points. Banks can then track these discrepancies and uncover the root cause or causes as well as strategise new measures and protocols to address these discrepancies faster, and help prevent them in the future.
Data Refinement
Increasing regulatory pressure is forcing banks to amass and record enormous amounts of data. With this overabundance of data, banks find it challenging to separate relevant information from superfluous data using traditional data management systems. Intelligent data management platforms have the capacity to parcel out and accurately derive relevant information and insights from numerous data sources for compliance reasons. As such, Big Data gives banks the ability to maintain accurate data and extract relevant information as and when required to help them ensure they’re up-to-date when it comes to regulatory compliance. In fact, alerts can be pre-programmed which highlight anomalies and notify relevant people for action.
Fiscally Beneficial
Small errors or oversights in compliance reporting can cost banks billions of dollars in fines and fees. As an example, the Commonwealth Bank of Australia went under the scanner recently for reportedly breaching financing laws. According to the investigations that were carried out, the bank failed to comply with financing laws 53,000 times. The penalty for each violation could reach up to $18 million. Although big banks may be able to withstand these losses, smaller banks don’t generate as much capital, resulting in a higher risk of them buckling under pressure. Investing in Big Data technologies could prove to be financially beneficial for all banks in the long run. It can help them reduce the costs of achieving regulatory compliance in the long-term and avoid penalties due to failure to comply with newer rules and regulations.
Big Data Advice
Banking regulations are here to stay, and they’re only going to become more stringent and complex in the future. With appropriate data management techniques in place, banks and other financial institutions will be able to deal with changing regulations, obtain data insights, establish conditional data relationships, and achieve regulatory success.
Since regulatory compliance is no longer an option but a must, banks must put foolproof data intelligence models and data analytics in place to track, store, and analyse data in accordance with compliance-related parameters. Apart from merely compliance, this is also good business practice.
Intelligent data management platforms such as Latize Ulysses allow businesses including financial institutions to understand the insights within the data they generate and collect. This helps them interpret the information they’ve collated from various sources so they can make the right business decisions that will help them gain a competitive edge and keep up with the rapid pace of change in their industries.
