What about the associated risk processes and compliance technology? Ultimately the focus on risk and compliance pivots around the extent of financial penalties and reputational risks to which the banks are responsible.

1. Risk & Compliance in Banking &
Financial Services

2. The current climate
(especially post-COVID) is
creating a new challenge
for bank leaders. The new
reality of compliance is
putting enhanced pressure
on what is a must-do and
what is a good-to-do?
After this crucial point, secondary considerations arise –
How do organizations decide the shape and size of their
compliance departments? What about the associated
risk processes and compliance technology? Ultimately
the focus on risk and compliance pivots around the
extent of financial penalties and reputational risks to
which the banks are responsible.

3. Risk and Compliance Mandate for Banking and
Financial Services
Leading banks understand that there must be a clear
assignment of responsibilities and accountabilities that
prevents role confusions, activity duplications, and
clarity over risk ownership. To that extent, there is an
increased focus on redefining the compliance function
mandate, which is listed under.
•Monitoring whether the business regularly meets regulatory
obligations.
•Independent oversight over all aspects of business activity.
•Creating first, second and third lines of defense for regulatory
changes.
•Assessing the continual impacts of changing risk profiles as
businesses evolve.
•Management of conflicts of interests and issues of
whistleblowing.
•Design, document, and disseminate compliance frameworks.
•Provide regulatory risk training
In the backdrop of these aspects, leading banks are
experimenting with new compliance frameworks and
cadences. Below we discuss the major components as
applicable to banks.

4. Risk assessment programs– mapping defined laws and
regulations that apply to various lines of business and
establishing a consistent risk language, thresholds, and
tolerances.
Compliance technology– Document tech platforms
used by compliance and leverage automation
possibilities for risk assessment, testing, reporting, and
issue management.
Policies and procedures– Develop formalized
compliance and risk policies, procedures, and controls
documentation. After that, establish and socialize
business operating principles.
Compliance monitoring and testing– Agree on scope,
frequency, and schedule for monitoring and testing.
After that, align on corrective actions and remediation
plans.
Crucial components of a Bank’s regulatory
compliance & risk management program.

5. Governance– Set and communicate the ‘culture of
compliance’ by establishing clear roles and
responsibilities. Then define governance processes and
manage compliance risk committees.
Regulatory interaction and coordination– Enterprise-
wide rigor for risk examinations, determining
communication protocols, and standard responses for
regulator inquiries.
Understanding the risk and compliance mandate and
exploring the program components is prudent to check
how technology is transforming the function. While these
initiatives entail significant investments in time and
money, the gains are noteworthy.
Data is continually enhanced by automating and
improving operational and reporting processes and
simplifying and standardizing processes. This supports the
development and adoption of AI models and superior-
tech cadences.

6. 1.) Capacity Building
Top banks are
increasingly using
technology to increase
or enhance
surveillance and
monitoring activities.
Use of Technology and Data – lessons from
the future
Additional investments in robust reporting allow
compliance teams to focus quickly on specific risks and
help them visualize the risk burden and the extent of
reputational damage.
2.) Robotic Process Automation
Automating existing manual processes (chatbots for
queries and, say, conflict of interest’s situations) have
longer-term efficiency gains, not to mention the number
of personnel freed for other key deliverables. Next,
investments in AI software (along with the advances in
Natural language processing, ML, and Semantic
Analytics) cut down the sheer volume of noncomplex
and non-advisory compliance-related questions.

7. 3.) Responding to Regulatory change
Continually scanning and deciphering new regulatory updates is
complex and labor-intensive. Leading banks create automation
libraries of a vast inventory of regulations, laws, and obligations
gathered from global sources. The teams then exploit AI tools to
match and contrast the proposed or incoming rule changes. Such
quick impact analysis yields significant efficiency gains.
4.) Preventing Financial Crimes
Every other month, financial crime is being foiled through data
mining and advanced analytics. With advanced eDiscovery tools
today, compliance teams monitor communications and identify
word patterns and sentiment by splits (values across wholesale and
retail firms). After that, creative solutions anchored by data and
technology allow more excellent coverage, faster feedback,
improved effectiveness, and lower costs.
5.) Innovating training approaches
With fast advancements in Ed-Tech sectors, risk and compliance
teams employ agile training approaches. By designing and
delivering digital micro-learning modules with robust assessment
practices, top banks can disseminate a much better understanding
of regulatory requirements across their lines of business.

8. Conclusion
Successful banking teams ensure their task automation
levels are aligned with their compliance strategy and the
organization’s risk culture and tolerance. Moreover,
identifying compliance processes, data, and analytics
allows for an overall risk assessment.
In the final assessment, these steps help banks set
priorities for measuring benefits and limitations in line
with their budgets, resourcing, timelines, governance
structure, change management approaches, and
communication strategy and training plans.
What does the future hold for risk and compliance
teams in banks?

9. Contact Us
Reach us: https://maveric-systems.com/reach-us/
Website: https://maveric-systems.com/
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in-banking-financial-services/
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