In the complex and heavily regulated banking sector, achieving and maintaining compliance, while also effectively mitigating risks, demands a deeply collaborative strategy that permeates every area of the bank. With regulations that are now so wide-reaching, it is no longer enough to relegate regulatory compliance to the compliance arm of the bank.
In short – compliance should no longer be a separate and independent function; it should be an integral part of the bank’s DNA. This requires making this a priority, having a plan, and incorporating this into the overall growth strategy and business model of the institution.
Internal and external collaboration is key to mitigating compliance risk and ensuring fair lending practices. This means fostering open communication and shared responsibility across all levels and departments within the bank, as well as engaging with external partners and regulatory agencies. Accountability is a key feature if this is going to work. This means setting expectations AND enforcing these expectations.
A bank’s compliance team should be involved in every facet of the bank, from marketing to lending. Some examples of compliance involvement include:
- Marketing: Reviewing marketing materials to ensure they are not misleading or discriminatory.
- Fair Lending: Implementing and monitoring fair lending practices to manage fair lending risk.
- New Products and Services: Assessing the compliance implications of new offerings before they are launched.
- Training: Providing regular compliance training to all employees.
By integrating the compliance team into all business operations, banks can more effectively identify, assess, and mitigate risks, and create a culture of compliance throughout the organization. There are tremendous benefits and efficiency gains from embracing such an approach.
