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
- Appointing a Compliance Overseer
- Simplifying the sharing, storage, and retrieval of regulatory information.
- Staff education and training
- Signing off on staff accountabilities for regulation adherence.
- 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.
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.
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