How banks can effectively manage regulatory change

Beware the accelerating pace of regulatory change.

Regulatory environments globally are becoming increasingly complex – 300+ million pages of regulatory documents will be published by 2020 and 600+ legislative initiatives need to be catalogued by a medium-sized, sell-side institution to have a holistic view of their rule book.

Global financial institutions must diligently monitor and implement change in three regulatory clusters: financial stability, prudent operations, and resolution. The flood of revisions averages 200 per day – three times the rate in 2011.

The Cost of Compliance 2018 Report found that 66% of firms expect the cost of senior compliance staff to increase, up from 60% in 2017. Nearly two thirds (61%) of firms expect the total compliance budget to be slightly or significantly more over the next year – another increase from last year (53%).

For banks with assets ranging from $1 billion to $10 billion, total compliance costs are averaging at 2.9% of their non-interest expenses; for banks with less than $100 million in assets, the costs averaging at 8.7% of their non-interest expenses. For some banks, it takes up to $4 billion a year to cover demands ranging from checks to prevent money laundering, to requirements to give more data to regulators for stress tests. By 2018, The Dodd-Frank Wall Street Reform and Consumer Protection Act had already cost banks $36 billion with MiFID II costing €2.5 billion.

By 2021, regulatory costs are expected to rise from 4% to 10% of revenue, driven primarily by the sheer volume of regulations – each week sees an average of 45 new regulatory-related documents issued.

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As regulatory environments globally become increasingly complex, strict enforcement of new and updated guidelines leads to a highly prohibitive cost of even the simplest misstep, not to mention misconduct.

Download our handy guide on how banks can effectively manage regulatory change and the complex compliance landscape.

Regulatory compliance is mission-critical, and no bank can afford to get it wrong. Failure to perform results in crippling enforcement fines, damaged reputation, lost customers & revenues, and depressed stock values. The 4-step methodology allows institutions to not only capture the regulatory change but provides the regulatory intelligence and analytical capabilities to understand the impact of regulatory change on a particular business.

CUBE is the only RegTech company to deliver a fully automated regulatory intelligence and change platform that spans the entire end-to-end compliance lifecycle, across all jurisdictions, lines of business, and product types.

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