Marc Murphy, the CEO of investment software solutions firm Fenergo, said on Tuesday that many financial institutions “are in real danger” of missing compliance deadlines for upcoming regulations.
Murphy said many banks are splitting compliance teams and appointing them separate budgets to handle streams of specific regulations, RFP Connect reports.
“Of course this makes perfect sense to compliance officers who are facing regulatory fallout in the event of non-compliance ahead of D-Day,” Murphy said, according to RFP Connect. “However, the fundamental problem with this approach is its failure to allow financial institutions to identify key opportunities to share data, technologies, processes and procedures across these various regulations and reduce the overall cost of compliance in the process.”
Additionally, Murphy said data quality will play a critical role in compliance for financial institutions.
“In an effort to fully comply with…pretty much every regulation, financial institutions need to have faith in the quality of data in their possession, right across the institution,” Murphy said, RFP Connect reports. “It makes sense then to strive towards achieving a single, cleansed instance of customer data in an effort to be able to ascertain all the day currently stored on the client or counterparty and all the outstanding data and documentation that needs to be collected (bearing in mind that data and documentation collected can also be re-used for several regulatory compliance initiatives).”
Murphy said data sets spanning credit risk, compliance, legal, operations systems would provide a “more complete profile.”
“To implement this horizontal vision of compliance, where all regulations can be solved in one go, it does take careful planning and consideration but the payoff is significant once in place,” Murphy said, according to RFP Connect. “But with so much pressure on financial institutions to meet looming deadlines, it’s quite likely that many will miss the initial implementation deadline dates. Furthermore, for those that do not meet the deadlines, it may well be at the cost of adopting poor compliance standards in an effort to get it over the line, leaving them susceptible to the scrutiny of regulatory audits.”