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What’s So Special about Regulatory Compliance Projects ?

Regulations are an ever growing feature of modern day banking arena. The phenomenon of regulatory compliance, though is not new, has renewed implications for these financial institutions by fundamentally altering the way business is conducted. Yet, the new wave regulatory reforms are far from completion.

It is evident that one of the critical success factors for a bank is its ability to achieve compliance on time. The implementation of such regulatory projects is accompanied by its own flavor of challenges, and usually a step-up from the regular strategic projects undertaken by banks. There are, however, certain key risk areas in this project life-cycle which could define or derail the success. It is essential that these key areas are recognized and actively managed from the start.

The interpretation of regulatory guidance is one such key risk area. With the regulatory texts distributed among multiple sources and action items buried under the legal jargon of titles, articles and technical standards, the implementation points are seldom lucid and coherent. Making sense of the regulation under such circumstances is a major challenge which needs to be addressed at the inception of project. Analyzing and understanding the impact of the regulation on the organization is the next major challenge for a bank. It is pivotal in defining the scope of the project thereby achieving optimum balance between under or over compliance. These activities cannot be done in silos amongst the strategic groups of the bank. Rather, it is important for the banks and financial institutions to initiate and maintain a continuous dialogue with the regulators and obtain clear regulatory validation on interpretation and scoping of the regulation.

Banks and financial institutions falling under the ambit of ongoing regulatory reforms should pay special attention to these stages of project implementation. This would ensure success of the project and avoid wastage of critical resources.

 

Regulatory Projects

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Cornelius Nandyal

Cornelius Nandyal

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Associates in Capital Markets

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This post is from a series of posts in the group:

Financial Services Regulation

This network is for financial professionals interested in staying up to date on financial services regulation happening anywhere in the world. CFOs, bankers, fund managers, treasurers welcome.


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