BAI Banking Strategies Executive Report

The banking world is brimming with buzz about artificial intelligence, branches, and the “seamless customer experience.” (Challenge: Let’s find an adjective to replace “seamless” before it becomes worthless.) Given so much to get excited about, it’s not as though the topic of compliance and regulation is going to get the party started—though it’s easy to imagine it clearing the room.

For starters, acronyms such as ALLL and FASB don’t exactly ring a bell the same way as, say, FDIC. And many bankers, it seems, don’t want to talk about it or deal with it, unless that means foisting it on some detail-oriented underling who tackles the task by sharpening pencils and whipping out a punch list.

Yet two truths prevail, one old, one new. On the tried-and-true side, compliance and regulation remain essentials of banking life: there to assist and protect banks and consumers in the long run. Clearly, there’s work to do in terms of overly tight regulation. But the basic, positive tenant of compliance remains unshakeable.

Here’s the emerging truth: If approached correctly, compliance yields opportunities. To begin with, a culture of compliance creates wins for customers, shareholders, and banks, writes BAI managing director Karl Dahlgren. “A compliance mindset produces a wealth of competitive advantages: Customers are better served, the bank is more operationally efficient, shareholders often enjoy a better return on their investment.”

So follows the next lesson: New standards can optimize income. Writing about the new Current Expected Credit Loss standard (CECL),  Craig Guillot notes that “banks should not only ensure they meet the expectations of regulators, but also implement processes that improve long-term productivity and value. Looking past the challenges, CECL is an opportunity to update systems and processes that can ultimately improve the bottom line.”

Yet, rules and regulations can affect a drag on customer experience. Much has been said about seamless transactions (uh oh, that word again) on e-commerce platforms. How can banks — which already have plenty of catch-up to do — make their compliance efforts invisible to consumers while taking away friction?

Patrick Sanders explores this in “Your prime delivery: Five ways to deliver on customer service like Amazon, no matter the regulatory roadblocks.” Here he quotes Brendan Dykes of Genysis, “Compliance does force banks and many other businesses to be mindful about security, but offering compliant solutions does not have to mean sacrificing delivery of a great customer experience.”

Kevin Malicki — Harland Clarke’s director of product management, governance, risk, and compliance — provides insights around five best practices to boost those three respective areas. Collaboration, properly mapped controls, and overarching tech integration allow smart banks “to break down organizational silos and provide greater visibility into the business,” Malicki writes.

It’s safe to say, then, that plainspoken wisdom surrounding compliance abounds, even if it will never become the stuff of party banter, not even at banking conventions. But in the end — and who would’ve imagined— it could be something that forward-thinking banks get to celebrate. Is it too soon to pass the compliance cocktails and confetti?