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Why Regulatory Compliance Software Is Becoming Essential for Banks

Why Regulatory Compliance Software Is Becoming Essential for Banks

Regulatory compliance means that a business or industry is aware of and in line with all the laws and rules that apply to it. These rules can be made at the local, state, federal, or foreign levels. Corporate compliance, on the other hand, is about following internal policies and rules to reach the goals and targets that the company has set for itself. But both types of compliance are essential because they can drive the organization’s strategic direction, decide its ethical framework, and ensure that people are held accountable and that information is clear.

Any compliance worker will tell you that financial safety is the first benefit of following the rules. If an organization doesn’t follow the rules, it might have to pay a lot of money. This happened to Goldman Sachs, Wells Fargo, and JP Morgan Chase in 2020. They had to pay fines totaling $7.50 billion out of the $11.39 billion that all U.S. banks had to pay that year.

Partnering with domain experts in Regulatory Tech like Maveric Systems equips leading banks with a decisive advantage in profitability and strategic preparedness.

Regulatory Compliance Software – Five Indispensable Ways for Banking Growth.

  1. Business Continuity – Regulatory compliance gives businesses many signs that show them what they need to do to be successful in their field. Compliance laws also came about to help make the market more uniform and let businesses compete fairly, ethically, and on an even playing field. Companies that follow the rules and regulations may do well in their area.
  2. Cyber-protection: Industries with more risks, like healthcare and finance, know that the information they collect is valuable and will likely be targeted by people with malefic intent. But sometimes, people in other businesses think they are less likely to be attacked. This false belief often leads to less attention on regulatory compliance and less security, which makes cyberattacks and data breaches more likely. Customers are less potential to stick with a company after a data breach, which can have a disastrous effect on the company’s finances and even cause it to go bankrupt or shut down.
  3. Increasing Costs of Compliance: After the 2008–2009 global economic crisis, governments worldwide have been putting out more and more rules for financial companies. India is no exception. Central Information and Management Systems (CIMS) and the Public Credit Registry (PCR) are the next steps for RBI’s regulatory reporting and lending information systems. For institutions with powerful RegTech frameworks, sending data to the regulator would be as easy as connecting to RBI’s system.
  4. New Normal Post COVID: Social distance will remain a standard shortly. Even simple processes like physical verification need to be done differently in this new normal. Recently, RBI permitted banks to use video KYC to check out applications for loans and credit cards. Last month, SBI returned its “Insta Savings Bank Account” program. These new projects must use new tools to ensure compliance and reduce risk. The biggest threat is that personally identifiable information (PII) data could be de-anonymized by devices that might not be safe, like the devices that users use to log into the bank’s network.
  5. Optimizing Banking Operations: Finance has always been a highly controlled field because people’s money is at stake. Technology has spread into all areas of life but has always been slow and careful, held by many different officials. This way of doing things was changed by fintech, which used technology to combine legal compliance with its new services successfully. The same technologies, like Blockchain, AI, machine learning, and cloud computing, are now being used by financial institutions to ensure they follow protocols like AML, KYC, NPA classifications, etc.

Conclusion

With more digitization and cheaper, safer cloud, robotics, and cognitive computers, there are more situations where technology can help. Compliance frameworks can only be finished with the help of people, but technology can automate the most boring, time-consuming, and repetitive chores. RegTech is moving beyond reducing risk and making sure people follow the rules to figuring out how to optimize compliance costs. It can change businesses by giving business insights, improving the customer experience, driving new goods and services, and helping the digital transformation of the industry as a whole.

In short, with the right mix of technology, compliance can become a relatively straightforward process that works well with other business activities.

About Maveric Systems

Starting in 2000, Maveric Systems is a niche, domain-led Banking Tech specialist partnering with global banks to solve business challenges through emerging technology. 3000+ tech experts use proven frameworks to empower our customers to navigate a rapidly changing environment, enabling sharper definitions of their goals and measures to achieve them.

Across retail, corporate & wealth management, Maveric accelerates digital transformation through native banking domain expertise, a customer-intimacy-led delivery model, and a vibrant leadership supported by a culture of ownership.

With centers of excellence for Data, Digital, Core Banking, and Quality Engineering, Maveric teams work in 15 countries with regional delivery capabilities in Bangalore, Chennai, Dubai, London, Poland, Riyadh, and Singapore.

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What Exactly Is Regulatory Compliance In The Banking Industry

What Exactly Is Regulatory Compliance In The Banking Industry

Regulatory compliance aims to ensure the bank operates within regulation, safeguarding its integrity and industry reputation. The function oversees multiple duties: protecting bank data, avoiding government fines, avoiding tax evasion, monitoring and reporting anti-money laundering activities, assessing risks, and ensuring zero violation of banking ethics.

The Regulatory function achieves its stringent aims by proactively conveying the compliance policy to staff, enforcing an ethical bank culture, and process standardization.

Working with banking domain experts like Maveric on industry-first RegTech Solutions assists leading banks in increasing their innovation potential and achieving growth plays.

List of Financial Data Protection Regulations

  1. GDPR (GDPR): The European Union’s GDPR is rigorous (EU). It manages EU data and online privacy.
  2. PCI-DSS (PCI DSS): Financial data security guidelines protect consumer data. It standardizes processing, storing, and sending cardholder data.
  3. Gramm-Leach-Bliley (GLBA): Financial firms must disclose their data-sharing policies under this law. Protect critical info.

Laws Regulating Financial Compliance

  1. Sarbanes-Oxley (SOX): After Enron, Tyco, and WorldCom, the US passed the Sarbanes-Oxley Act. The Act addresses financial disclosure and recording by organizations. It will combat corporate fraud and corruption. Financial service compliance requires cybersecurity to protect financial data.
  2. AML Directives: AML directives prevent money laundering and terrorist financing. It helps standardize EU regulations.
  3. EMIR: EU MiFID II regulates financial markets. It safeguards investors. It standardizes financial services practices.

The Growing Use Case for Regulatory Compliance in Banking

As technology and consumer habits change, businesses must follow more regulatory guidance. Decades ago, there was no internet or digital assets. These things drive the economy. Thus, effective laws are needed for consumer and corporate well-being. Unsurprisingly, today companies are prioritizing regulatory compliance. Compliance reduces security breaches and data losses. Compliance also prevents license loss, financial fines, reputation damage, and excessive customer turnover.

Regulatory Compliance Focus in Banking

The Costs of Non-Compliance

The impact of non-compliance with rules and regulations has more than just a monetary impact on your firm. Financial service customers choose reputable providers that comply. If customers read online about a data breach or CFPB penalty, they may hesitate to use your financial services. In addition, lawsuits from customers are a growing risk of non-compliance. Target settled claims for $18.5 million, while Nationwide Insurance was fined $5.5 million. Lawsuits and penalties can hurt your business. For example, if you break FDA laws, you can lose access to consumers that seek third-party assurance on the monies deposited at your bank. However, one compliance blunder can wipe out years of cultivating your company’s reputation with other firms and customers.

Preliminary Steps for Regulatory Compliance

  1. Complete a Compliance Audit – Understanding the areas where the business falls short and the inefficiencies.
  2. Assessing the quantitative and qualitative impact on your business. Actionable steps for improving come out of this exercise.
  3. Appointing a Chief Compliance Officer: A Corporate Compliance Officer is tasked with supporting the organization’s ethics, accountability, and integrity.
  4. Create Internal Company Policies: Institutionalizing compliance handbook and routine self-assessment exercises keep the employee sharp across various regulations.
  5. Regulatory Compliance Training: Training employees on updates and changes to corporate compliance policies is vital.

Ensuring Regulatory Compliance

  1. Industry regulations: Determining which laws affect the firm based on region and industry.
  2. Establish law requirements: The business and its operations determine the compliance requirements for each law. Assess specific compliance responsibilities.
  3. Record procedures: Good documentation shows how business practices meet regulatory compliance criteria to avoid fines as and when audited.
  4. Regularly check standards: Regulations vary with cyber security. To stay compliant, track compliance requirements.

Conclusion

Financial services marketing is heavily regulated for a good reason. Most financial services organizations have had their carefully planned efforts destroyed by legal or compliance. Understanding full regulatory restrictions help FIs strategize and develop around them instead of letting them stifle innovation.

About Maveric Systems

Starting in 2000, Maveric Systems is a niche, domain-led Banking Tech specialist partnering with global banks to solve business challenges through emerging technology. 3000+ tech experts use proven frameworks to empower our customers to navigate a rapidly changing environment, enabling sharper definitions of their goals and measures to achieve them.

Across retail, corporate & wealth management, Maveric Systems accelerates digital transformation through native banking domain expertise, a customer-intimacy-led delivery model, and a vibrant leadership supported by a culture of ownership.

With centers of excellence for Data, Digital, Core Banking, and Quality Engineering, Maveric Systems teams work in 15 countries with regional delivery capabilities in Bangalore, Chennai, Dubai, London, Poland, Riyadh, and Singapore.

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What To Know in 2023 Regarding Financial Regulatory Compliance

What To Know in 2023 Regarding Financial Regulatory Compliance

Recent occurrences, particularly stories about global sanctions systems, have prompted regulatory organizations to respond vigorously. It is anticipated that authorities will continue to intervene through laws and enforcement in 2023 to combat financial crime truly. The European Commission has already completed a comprehensive evaluation of the most significant anti-money laundering (AML) and terrorist funding risks and is preparing to offer a comprehensive legislative package to address these risks globally.

Partnering with niche Banking Technology domain specialists like Maveric Systems creates unprecedented insights for FIs in regulatory compliance and risk management.

Here is a roundup of the critical areas for 2023 Financial Regulatory Compliance.

Capital shifts

The federal banking agencies (FRB, OCC, and FDIC) have suggested that they will evaluate capital mechanisms and how they promote the resilience of the financial system, both individually and collectively, at financial institutions. When calibrating capital requirements, the FRB has indicated that agencies will strive to minimize unexpected consequences, limit chances for gaming, and prevent high compliance costs that do not yield risk reduction.

Technology-led Resilience

As the popularity of the cloud, e-communication technologies and platforms, and digital tools increases alongside the number of connected service providers, regulators warn of potential hazards, such as information security events, cyber attacks like ransomware or virus, and service failures. Regulators will continue to scrutinize the adequacy of a company’s contemporary technology risk management program; they will pay particular attention to significant operational changes using new technology advances (e.g., cloud, AI, digitalization of risk management processes).

Risk Management

Regulators seek to improve data risk management, particularly in governance incident reporting, vulnerability management, and identity/access control. Companies should develop frameworks for scoping their programs that are both realistic and defensible, taking into account regulatory regulations and expectations as well as business considerations.

Expanding the scope of fairness

Regulators have broadened their expectations of “fairness” to include all consumer/investor products and services throughout the product life cycle and fair lending rules and credit products. For “unfair” outcomes to result in consumer/investor harm, they need not be intentional, and regulators will focus on companies’ attempts to guarantee a “fair and balanced” approach for all consumers.

Cryptos and Blockchain Advisory

Agencies will continue to issue danger warnings and seek to codify greater authority and safeguards in the payments and digital asset space. Topics will vary from stable coins for payments and digital currencies issued by central banks (CBDCs) to regulatory agencies, frameworks, and financial stability threats.

Financial Crime Management

Financial service providers continually try to mitigate fraud and financial crime as ongoing concerns. Changing technology advancements, geopolitical events, and interconnected and interdependent financial networks may raise these risks, exposures, and complexity, especially as criminals become more skilled. Regulators will remain worried about financing terrorism, beneficial ownership, sanctions/tax evasion, consumer fraud, and potential compliance issues.

Four Crucial Themes for Financial Regulatory Compliance

  1. Demand for improved data governance and reporting: Increasing data availability and enhancing data quality are two crucial concerns for financial institutions. As bank regulators become increasingly dependent on data, they are accelerating the already elevated prioritization of strategic data programs within the banks they oversee.
  2. Cyber and information technology (IT) risk: Regulators are increasingly concerned about the absence of solid cyber security policies and processes to protect the assets and data of a firm. They continue to stress the enhanced participation and accountability of the board and senior leadership in establishing the organization’s cyber security strategy and supervising its cyber security program.
  3. Sanctions and the Bank Secrecy Act (BSA)/anti-money laundering (AML): Anticipate three critical issues at the forefront of regulators’ priorities in 2023: the rising presence of digital assets throughout the financial ecosystem and the handling of associated AML risks.
  4. Consumer protection and financial inclusion: Anticipate that regulators will continue safeguarding consumers from harm in 2023, particularly in the regulatory periphery. All parties must understand and resolve the legal arrangements, cultural differences, and potential governance gaps between banks and nonbanks to ensure successful compliance in light of ongoing regulatory scrutiny.

Bank Regulatory Agenda in 2023

Conclusion

The disruptive factors of 2022, such as high inflation, interest rate volatility, the Russia-Ukraine conflict, the lingering effects of the pandemic, stock and bond market declines, and events in the crypto asset markets, have influenced banking regulatory perspectives and will likely have an impact on the direction of banking regulations in 2023.

About Maveric Systems

Starting in 2000, Maveric Systems is a niche, domain-led Banking Tech specialist partnering with global banks to solve business challenges through emerging technology. 3000+ tech experts use proven frameworks to empower our customers to navigate a rapidly changing environment, enabling sharper definitions of their goals and measures to achieve them.

Across retail, corporate & wealth management, Maveric accelerates digital transformation through native banking domain expertise, a customer-intimacy-led delivery model, and a vibrant leadership supported by a culture of ownership.

With centers of excellence for Data, Digital, Core Banking, and Quality Engineering, Maveric teams work in 15 countries with regional delivery capabilities in Bangalore, Chennai, Dubai, London, Poland, Riyadh, and Singapore.

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Need to Know About Regulatory Compliance in the Cloud

Need to Know About Regulatory Compliance in the Cloud

From $313 billion in 2020, it is predicted that global spending on cloud services would increase to $482 billion in 2023. Additionally, the market’s value will surpass $1,250 billion by 2028.

As more businesses use the cloud to boost time-to-market, cut costs, and increase organizational agility and resilience, it stands to reason that they would be interested in learning more about compliance reporting and cloud compliance. Cloud Compliance is a vast area that is continuously getting updated and banking and FIs are well served consulting with domain specialists like Maveric Systems.

Does Cloud Compliance Matter?

Many industry rules and regional/national laws have recently been developed to protect customer privacy and data security. Simply put, businesses must safeguard the privacy and data of their clients or risk legal repercussions. Depending on the sector, organizations might need to abide by rules and laws like HIPAA, PCI DSS, SOX, or GDPR. The workflows, procedures, and systems must all follow the rules established by these regulatory frameworks. Appropriate departments must make sure that any data stored in the cloud infrastructure complies with all applicable data protection and privacy laws. Non-compliance can result in very expensive consequences. More than reputation losses, there are negative consequences for revenues and profitability, not to mention fines and lawsuits.

Does Cloud Compliance Matter?

Cloud compliance components

The criteria for cloud compliance will change depending on your industry and the rules that govern your firm. Below, are the common elements that influence general cloud compliance.

  1. Specific guidelines are provided for the proper handling of data in the cloud by some sectors. These adhere to compliance criteria for cloud security. For instance, ISO 27017 contains cloud-specific security rules. That entails putting in place particular security measures related to how your cloud environment is set up. A business associate agreement between a covered entity and its cloud service provider (CSP), under which the CSP is responsible for adhering to HIPAA Rules, is also required under HIPAA.
  2. Statutes and rules. State, federal, and international laws and regulations all influence the needs for cloud compliance. For cloud compliance, data privacy, data protection and localization, and cyber security, it’s critical to be aware of local laws and regulations. HIPAA, PCI DSS, and SOX are a few typical laws.
  3. Cloud governance controls offer explicit security regulations on how to use (and how not to use) the cloud and assist in managing a company’s data within the cloud. Businesses should have policies in place for managing, sharing, and tracking data in the cloud and increasing cloud usage. These ought to address cloud strategy ownership and accountability as well.
  4. A formal agreement between two or more parties is defined by a contract. When a business signs a contract, it is responsible for upholding the conditions. If you don’t, you risk receiving harsh financial penalties. An organisation that handles or keeps credit card data most likely has a contract with credit card providers that calls for it to meet particular PCI DSS requirements (PCI-DSS).

Best Practices for meeting regulatory cloud compliance.

  1. Understand your compliance requirements
  2. Recognize legal duties
  3. Control access to information.
  4. Conduct regular audits
  5. Understanding how data is stored
  6. Encrypt everything, always.

Conclusion

The majority of businesses are utilizing the cloud because there are sound commercial justifications for doing so. The use of the cloud is not prohibited by the legislation. But it does have a substantial influence. When shifting to the cloud, it’s crucial to understand which nations will process your data, what regulations will be in place, what effect they will have, and how to comply with them using a risk-based strategy. Due to the wide variety of rules, including those governing data protection, data localization, and data sovereignty, it may be challenging. You should also consider regulations governing information access or interception, which may allow governments or other parties to access your cloud-based data. The laws of other nations may also be applicable. It’s crucial to understand the security precautions that you must take in accordance with the law.

About Maveric Systems

Starting in 2000, Maveric Systems is a niche, domain-led Banking Tech specialist partnering with global banks to solve business challenges through emerging technology. 3000+ tech experts use proven frameworks to empower our customers to navigate a rapidly changing environment, enabling sharper definitions of their goals and measures to achieve them.

Across retail, corporate & wealth management, Maveric Systems accelerates digital transformation through native banking domain expertise, a customer-intimacy-led delivery model, and a vibrant leadership supported by a culture of ownership.

With centers of excellence for Data, Digital, Core Banking, and Quality Engineering, Maveric Systems teams work in 15 countries with regional delivery capabilities in Bangalore, Chennai, Dubai, London, Poland, Riyadh, and Singapore.

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How to Comply with Banking Regulations

How to Comply with Banking Regulations

Gaining the customer’s confidence is the goal of compliance across all banking functions. Treating customers somewhat is the cornerstone of this imperative. When creating an investment product, banks must ensure that it fulfills promises and that the customer is fully aware of the risk implications. Moreover, when handling sensitive customer data, FIs agree to abide by it to prevent loss and abuse. Ultimately, to sidestep market manipulation and negate detrimental customer impact, the banking industry’s deep reliance on regulations increases the trust that maximizes business.

Deep diving into Banking Compliance

The regulatory standards include operational practices and procedures that are jurisdictionally relevant to the geography bank’s geographies. Following the regulatory mandate makes sense to partner with seasoned technologists with deep domain experience in the Reg-Tech space, like Maveric Systems.

This step assumes importance as the bank or the FI must incorporate procedures that meet internal and external stakeholder requirements. This standard becomes crucial for deterring, identifying, and investigating violations or non-compliance.

An efficient bank compliance program ensures that employees understand (and are accountable) for compliance risks, as well as necessary mitigation methods that are in place. Furthermore, when employees are assigned specific responsibilities, they must be backed with resources and training that positions them for maximal success. This crucial step saves the banks from financial penalties, legal action in civil and criminal courts, and reputational harm.

Best practices for Banking Regulations

  1. Appointing a Compliance Overseer
  2. Simplifying the sharing, storage, and retrieval of regulatory information.
  3. Staff education and training
  4. Signing off on staff accountabilities for regulation adherence.
  5. Leadership focuses on establishing a compliance culture that values compliance, ethics, openness, and integrity.

Approaches for creating watertight banking regulation practices

Begin by pulling through a comprehensive list of local laws and regulations that affect all the business lines and products manufactured in the region and country. The next step involves identifying the relevant requirements (or clauses) that apply to those business lines and products within those laws. Moreover, keeping track of all revisions and amendments to the rules and regulations must be maintained and audited. This step also extends to locating gaps in the business’ documentation of training manuals, policies, and procedures. Finally, the organization has to implement and set up workflow software that controls risks, reporting, and issues that broadly influence the business.

Conclusion

In sum, the foundation of banking compliance lies in the FI’s fundamental principles of integrity, process robustness, and fair customer services that ensure happy shareholders and earn society’s trust, including the regulatory authorities.

About Maveric

Starting in 2000, Maveric Systems is a niche, domain-led Banking Tech specialist partnering with global banks to solve business challenges through emerging technology. 3000+ tech experts use proven frameworks to empower our customers to navigate a rapidly changing environment, enabling sharper definitions of their goals and measures to achieve them.

Across retail, corporate & wealth management, Maveric accelerates digital transformation through native banking domain expertise, a customer-intimacy-led delivery model, and a vibrant leadership supported by a culture of ownership.

With centers of excellence for Data, Digital, Core Banking, and Quality Engineering, Maveric Systems teams work in 15 countries with regional delivery capabilities in Bangalore, Chennai, Dubai, London, Poland, Riyadh, and Singapore.

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