Embedded Compliance: A Unified Approach for Growth & Success

As financial institutions continue to evolve to deliver the digital experience now expected by tech savvy, mobile members, they should not neglect to look for opportunities in one of the often-overlooked components of the digital journey – compliance documentation. Historically, most institutions approach compliance in a survival mindset – meaning if they just followed the rules well enough, they can’t lose. But they aren’t positioned to win this way, either. Oftentimes survival tactics entail high costs from manual-intensive processes and siloed operations, preventing institutions from investing in growth opportunities, building relationships and removing friction for members. In fact, according to Thomson Reuters, the number of regulatory changes a financial institution must deal with every day has increased from 10 in 2004 to nearly 200 today. That’s one regulatory change that has to be interpreted and implemented every 12 minutes. Financial institutions need to leverage the same 24/7/365 approach to compliance that they are seeking to deliver to their members.

To remain a central part of their communities, credit unions must choose to play the game differently. They can do so by embedding compliance into digital delivery processes and viewing it as an integrated part of the data management process. This progressive and modern strategy can be accomplished using open technologies, like APIs, to drive an entire digital ecosystem.

Below are a few reasons why credit unions should be adopting an embedded compliance approach:

• To accelerate their digital strategy and enhance their data security at a reduced cost. Many cybersecurity and compliance risk processes involve high costs, $270 billion per year to be exact, according to International Banker Magazine, and complex, time-consuming tasks, like manually scanning for changing regulations or examining for errors. Some credit unions even add new tracking and reporting systems and additional layers of auditing. These methods often include multiple databases scattered across technology platforms, raising the risk of exposing members’ personal identifiable information (PII) to a data breach.

Credit unions can benefit from a single solution or plan that addresses both cybersecurity and compliance risks at the same time, strengthening the institution’s overall security profile and ensuring it remains in sync with compliance updates. This “built in” technology can enhance data security by offering critical safeguards for sensitive member information. It can also monitor for errors, identify problems and apply the best resolution on its own, allowing credit unions to deliver the appropriate compliance content with the correct regulatory disclosures for any type of account, based on datapoints like product type and the institution’s governing law state. This ensures that financial institutions stay compliant with applicable federal and state regulatory requirements while simultaneously accelerating their digital strategy, reducing costly errors, and alleviating time and money spent on data inspections and staff training programs.

• To break down silos and minimize organizational fragmentation with immediate, real-time responses. It’s almost inevitable for institution silos to worsen without one unified system of data, especially in a digital world. Inter-departmental collaboration is impacted, leaving separate divisions unfamiliar with each other’s requirements. Doc prep solutions that require duplication of data entry contribute to a disintegrated data system and can leave credit union operations more fragmented, worsening communication across channels, increasing the risk of error and making inefficient use of staff.

Embedded compliance can help credit unions eliminate this fragmented work environment, reducing siloed operations and engaging each department through one unified system. Additionally, embedded compliance dovetails well into digital delivery channels, reducing the number of user clicks to view and acknowledge compliance content.

• To boost the member and employee experience. Credit unions have earned their reputation for a hands-on and personalized approach to member service. However, time spent on manually examining compliance and re-keying data can lead to low staff productivity and low member satisfaction rates. And if the technology is not up to date, credit unions may risk downtime or even a data breach, both reputational risks from which recovery is difficult. With embedded compliance, credit unions can devote more resources to their growth strategies and member relationships while simultaneously addressing increasingly tight regulatory requirements and evolving data security needs.

To successfully improve overall data management processes, credit unions must make compliance a top priority – a “moat” around an organization and its members, keeping data secure, creating a high level of trust and safety for those inside. The nature of both technology and compliance means that this protection requires constant maintenance to remain strong and up to date. Embedded, cloud-based compliance is the solution to automate compliance updates and to help catapult a credit union’s ability to compete in the market and deliver the best end-user experience.

Chris Appie is the President of Compliance Systems, a Grand Rapids, Mich.-based compliance documentation and technology company serving the financial services industry.