A new mind set is needed for banks to tackle today's regulated environment. Instead of fighting each new requirement or tackling them one at a time, banks should embrace the core underlying intent of regulation, which is to provide for ethical behavior, transparency and risk avoidance. This will reduce overall compliance costs and increase both the speed and flexibility of implementing new compliance requirements.
Banks should change the foundation of their finance and risk systems and processes so that new regulatory changes – both known and unknown – can be quickly adopted and met. By building the core principles of transparency, ethics and risk avoidance into their processes, banks will be better positioned to successfully comply with new regulation and find greater flexibility to minimize disruption to the business.
By taking an outside-in view of risk, banks can include a broader scope of external factors into their planning in order to capture a truer and more responsive outlook on what might endanger the bank's business.
Our proposed integrated framework enables banks to build their risk and finance processes for better efficiency and flexibility, while enabling their broader objectives to digitize and better serve customers.