From Compliance to Performance: Leading Practices from Wolters Kluwer Financial Services

In the aftermath of the financial crisis, financial institutions have been hit by a wave of new regulations and closer attention from supervisors. These regulations are more detailed and complex than their predecessors, requiring more data to be submitted at more regular intervals. This has greatly increased the compliance burden on financial institutions.

Financial institutions are struggling to meet these requirements, as they have to put more and more resources into meeting regulators’ demands for compliance and information. Stricter regulations and closer supervision mean that regulators want firms to provide more evidence of compliance and to submit more information on their activities. While compliance is an important business goal, it should not be a primary goal. Performance-related goals, such as profitability, return on equity, and customer satisfaction, need to take precedence.

However, as a result of the increased focus on compliance, financial institutions are finding it hard to improve performance-related goals. In a difficult financial environment, firms are looking for options that will allow them to meet compliance requirements without costing too many resources and preventing them from improving risk management and performance. The goal for financial institutions should be to achieve the right balance between compliance and performance.