How Small Institutions can use Tech to Enhance Compliance Efforts

Posted by Sanjeev Menon on Dec 13, 2019 9:00:00 AM

In ICS insights, client, Legal and Compliance, icsNYC

When small institutions think of compliance programs, the first thing that comes to mind is huge technology investments. Compared to larger corporations, small companies may not be able to budget as much for new technologies, hence the hesitation to implement them in compliance efforts due to expenditures that accompany these changes.

While added expenses can be a cause for concern, small institutions need to know that their budget does not have to serve as a barrier in the way of innovation. Many innovative solutions can be implemented along with cost-efficiency, as small companies take advantage of their size. Here are some of the steps they can follow to enhance regulatory compliance through tech:

Facilitate discussions on compliance efforts.

Before the compliance team begins building up programs, it’s important to start a conversation about the organization’s current compliance efforts and what can be done to enhance them. This will provide a baseline and a chance to brainstorm different ways to build up regulatory compliance efforts.

The team can also speak with potential stakeholders in this project, including financial institutions, technology providers, and other service firms. They will play a major role in the overall process and can provide additional insight into how to enhance compliance.

Determine what data needs to be closely monitored.

Once the team got a better idea of what their goals are, next is to determine and compile data that need the most monitoring. For the most part, small institutions have fewer data sources and storage locations. This gives small institutions an advantage over large corporations, allowing them to organize and normalize information into one data set, ready for analysis.

Normalizing collected data sets will give a more extensive view of how the organization stores and keeps track of data. After this, the team can enter the data into a transaction monitoring system for in-depth review. Once this step is complete, they can start applying algorithms to gather relevant data while ensuring that no important information is lost.

Use data to drive compliance and begin monitoring for suspicious activity.

Once the necessary data has been organized, the next step is monitoring for suspicious activity. Although this can be done manually, the best compliance programs often use automation for more frequent processes, such as wire transfers and automated clearing house transactions.

The team may even want to consider using artificial intelligence to automate certain parts of the transaction monitoring. While this is a good way to streamline the process, compliance programs still benefit greatly from human intuition and oversight. Human knowledge should continue to be incorporated into your compliance program, along with the use of automation and other technological advancements, which can provide additional efficiency and effectiveness.

Use data to enable communication and avoid misalignment.

For any projects that the team takes on, ensuring consistency across the board is crucial. Misalignment and inconsistency can result in monitoring errors, which can lead to expensive consequences. The compliance team must ensure that all systems are aligned to avoid having any essential information fall between cracks. Small institutions are at an advantage here since they often work with a limited number of systems, making it easier to communicate and align.

Incorporate artificial intelligence into compliance efforts.

Artificial intelligence (AI) has become an innovative solution for better handling of substantial amounts of data. It also serves as another way to streamline the process and guarantee efficiency. While technological advancements like AI can help enhance different aspects within an organization, human expertise should still play a major role in compliance programs. Human experience and knowledge ultimately serve as the foundation for effective compliance programs while paving the way for innovation.

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