Banks and financial institutes know the importance of regulatory change management. Yet we keep hearing about how many organizations are still struggling with adapting to new regulations and minor updates to regulations. Their struggle is not because they are becoming more inefficient – the real reason is that changes are now occurring at a faster pace than before. Banks and financial institutions that are still handling regulatory change management manually are finding it hard to stay abreast of the frequently occurring changes and are paying dearly for it.
Regulatory changes are occurring at a faster pace not because governments want more changes, but because innovation is happening at a faster pace than ever before. Bloomberg had a fascinating article on how the pace of innovation we have now is faster than anything we have ever seen, but we don’t need to read any article to see the pace of this change. Even in the financial industry we can see that products are now being created faster than ever before. Disrupting business ideas are now being implemented at a pace that was unheard of previously. Innovations like the blockchain, cryptocurrencies, and much more are forcing the governments to update and replace regulations to deal with this pace of innovation.
This is why banks and financial institutions simply cannot handle regulatory change management manually and still expect to be competitive with the rest of the industry. The pace of regulatory changes has changed, and it is time that organizations also update their regulatory change management systems accordingly.
Regional banks and financial institutions can turn this weakness into a strength with the right regulatory change management solution. To see why RCM solutions are so important we simply should see some of their capabilities, such as:
Automation based regulatory change management solutions can go through new regulations at a pace that is simply impossible for humans to match. If there are 200 pages of updates, it will take the automation based system only a few minutes to parse them completely, while the same task will take a minimum of a full day for employees.
Regulatory change management solutions don’t just go through updated resolutions – they also highlight what has changed. So, if an update to regulations occurs, the regulatory change management solution can instantly show where the changes have occurred. This means that management can parse out changes and act accordingly, instead of having to manually find every change.
This also gives regional banks and financial institutions the ability to find out changes that are relevant to them. Regulatory change management systems can parse the regulations to find parts that directly affect an organization. If an organization works mostly as a creditor, the RCM solution will highlight all changes in passages that are relevant for creditors, and so on.
Currently, organizations need employees to go through all the regulatory changes and then notify the relevant stakeholders if the changes affect their work. In modern regulatory change management solutions this happens automatically. Since everything is mapped to the relevant policies, procedures, documents, and much more, notifications can be automated.
To truly understand the power of this ability, consider how it works out in practice. In the RCM system everything is mapped. For example, the system known that part 3 of section b of regulation 123 affects 3 policies, 10 documents, and 7 rules. If the system detects any change in the part 3 of section b of regulation 123, it will automatically highlight the 3 policies, 10 documents, and 7 rules that are affected.
Thus, banks and financial institutes not only know what changes have occurred, but they also know which other items are affected by the change and thus may need to be updated. Instead of manually ensuring that every part of the organization is compliance with the new regulations, everything is done automatically.
Automated regulatory change management is already the norm in some of the biggest financial industry organizations in the country – but the same automation cannot be seen in regional banks and financial institutions. One big reason is that these banks and financial institutions often believe that automation will be too expensive or is out of their reach.
Regional banks and financial institutes simply have to look ahead of legacy vendors and instead work with innovative companies that are making regulatory tech solutions that are designed for such organizations. The business plan of these innovative companies is very different than legacy vendors.
Legacy vendors force organizations into multi-year contracts which quickly balloon into multimillion dollar deals. Such contracts are not compatible with the way regional banks and financial institutions work. On the other hand, there are many fantastic regulatory management solutions that have been designed from the ground up for smaller to medium sized organizations. Instead of forcing the clients into long-term contracts, these solutions are available on monthly payment plans with no long-term commitments. That’s not all – these organizations also offer free trials of their solutions.
If your bank wants to see whether automation will help them deal with regulatory changes better without entering a multimillion dollar contract with a legacy vendor, you simply need to look for a regulatory change management solution designed for banks like yours and ask for a demonstration. Automated RCM systems can make regional banks and financial institutions faster and more efficient at very low costs.