In the last issue (part 1), I talked about compliance stigmas and the changing perceptions of compliance. In the second and final part of this article series, I will be finishing up how compliance barriers are coming down, along with a serious challenge for your institution.
The compliance barrier
Revenue and compliance are inextricably linked. The common perception is that the practice of compliance inhibits revenue generation, while the cost of compliance is a revenue drain. This lethal combination is a significant factor in the serious challenges that so many small and mid-sized financial institutions find themselves in these days. Lacking the means or capability to enter new markets and facing ever increasing compliance costs, too many financial institutions face the prospect of either going out of business or merging with larger institutions.
But imagine a scenario in which the revenue/compliance dynamic was flipped, and compliance went from being a revenue drain to a revenue driver. How could this be possible? As with so much transformative change in our economy, the answer lies in technology.
Most legacy compliance platforms have been around for decades, and are not necessarily suited to meet current realities. But new Fintech and Regtech solutions are now available to increase automation, transparency and efficiencies for compliance responsibilities. Institutions are leveraging these technologies that are tied to new product innovations for payments, lending, consumer identity validation, real-time transaction monitoring, document management and more.
So imagine your sales, operations and compliance teams no longer working at odds with one another, but in collaboration with one another. That is happening today as compliance-centered technology solutions are empowering compliance departments to help lead the charge in new verticals.
Seven-step challenge for your institution
I challenge you, your leadership team and department heads to consider the following seven steps intended to expand vision, encourage critical thinking, and provide purpose and ‘ownership’ in new potential growth strategies.
1) Create a culture that encourages entrepreneurial or ‘outside-the-box’ ideas. You can do this by setting up a brainstorming meeting once per month with your institution’s entire staff or having a suggestions box in the office.
2) Take time to identify with your staff what the hurdles to ‘change’ in your institution are and how they can be overcome.
3) Take steps to bring departments together (like sales, compliance, operations) to discuss ideas, challenges and opportunities to bridge gaps and create a positive teamwork culture.
4) Have each department make a short list of new technology solutions that they believe could increase efficiencies, competitive advantages, new opportunities and profits.
5) Identify verticals that have traditionally been viewed as ‘higher risk’ in nature. Then, assess whether the new available technologies could allow your institution to responsibly, sustainably, and profitably bank them.
6) Have your staff talk with merchants in these verticals and ask them what their biggest challenges are in their business. Don’t assume, go ask. Then, ask your employees to identify how your institution can help solve these problems.
7) Move and act now. I encourage you to have a sense of urgency and begin taking steps immediately.
We bankers are creatures of habit, and changing habits can be intimidating. “What is everyone else doing?” is the invariable knee-jerk response when confronted with something out of the norm. But following the pack only ensures you never separate yourself from it. The corporate landscape is littered with companies unwilling or incapable of adapting to new realities. Will banking somehow be immune to these powerful market forces? History suggests not, which means the time to adapt is now.
This article was authored by Hypur’s Executive Vice President of Sales Todd Fuller in collaboration with Hypur’s Executive Vice President & General Counsel John W. Vardman and Executive Vice President of Banking & Compliance Andre G. Herrera. For more information about compliance or Hypur, please email firstname.lastname@example.org.