By Matt Ondus, Enterprise Compliance Risk Officer, Bankers Healthcare Group NAVIGATING TODAY’S EVOLVING REGULATORY LANDSCAPE The current financial industry is innovative, but as banking organizations have expanded their activities, they have also faced an increasingly complex regulatory environment. Plus, COVID-19 complications have exposed several high-profile compliance breakdowns. Federal and state regulatory agencies, legislators, and the general public are working to protect banking customers like never before. They are rigorously examining consumer and small business banking customer practices and regulatory compliance performance. Banking organizations understand that a heightened risk of compliance failure can result in litigation. Consequences may include damaged reputations, financial penalties, and regulatory constraints. Nobody wants that, but compliance has a price tag, and it isn’t cheap. Kroll Institute commissions an annual study conducted by Duff & Phelps, a financial consultancy firm. The most recent study is called Global Regulatory Outlook 2021. It includes analysis based on survey results from 250 senior executives in the U.S., United Kingdom, Europe, China, and India. All respondents work in a broad range of businesses that provide financial services. One fascinating graphic in the report was about compliance costs. A full 32.9% of the respondents did not know how much of their 2020 revenues went to regulatory compliance. Worse, 32.8% did not know how much they would be spending on regulatory compliance from 2021 revenues. The remaining companies had a better idea about compliance costs, but they spent or planned to spend widely varying amounts of money. For any company that spends more than a small percentage of its revenue on compliance, making sure compliance takes place is a big expense, but it is a core cost of doing business. You cannot be Percentage Spent or Budgeted (%) 2020 (%) 2021 (%) <1 14.3 11.6 1-5 23.9 23.3 6-10 13.8 12.2 11-20 7.9 10.6 20-25 1.6 3.7 >25 5.9 5.8 22 | The Show-Me Banker Magazine
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