Building your best culture of compliance, and beyond

For some banks, regulatory compliance programs inspire all the enthusiasm of a forced march.

Mandatory compliance training and retraining are regarded as a burden—one more obstacle to getting things done that day. Paying too little attention to the critical task of compliance, leadership fails to underscore its importance and motivate the troops to make it second nature. It’s treated as just another set of boxes to cross off.

Yet other financial services organizations embrace compliance, going well beyond the minimum standard of simply steering clear of regulatory hot water. Bankers cultivate a culture of compliance and responsibility, deriving personal and professional satisfaction from knowing they’re doing the right thing the right way.

From the board room to the front line, compliance is a core value and recognized as the surest way to protect the bank, its reputation and its customers from harm.

In a culture that goes beyond compliance, employees welcome training and retraining, knowing instruction can deepen their knowledge and boost their careers. They no longer live in fear of a reprimand for doing something they didn’t fully understand could incur a penalty for the bank.

Employees can confidently do their jobs knowing they operate within the walls of compliance. They appreciate the significance of incorporating compliance procedures. And as any banker knows, the rules and regulations forever change.

A compliance mindset produces a wealth of competitive advantages: Customers are better served; the bank is more operationally efficient; shareholders often enjoy a better return on their investment.

Consider these best practices when cultivating a culture of compliance:

• Start at the top. Leadership sets the tone by taking compliance seriously and conveying its importance throughout the organization via internal announcements, onboarding, performance reviews, coaching, meetings, and of course, training and retraining. When leadership spearheads a culture of responsibility, compliance gets woven into every activity of the bank and becomes part of the institution’s DNA.
• Spread compliance expertise across the organization. Embed subject matter experts in compliance in the legal department, in the risk-management department and in the audit department—even in some of the business units. Siloing expertise in the compliance department can diminish its impact.
• Address inefficiencies in compliance training through role-based instruction. For example, if a lender and personal banker are required to take the same class—but it’s geared for the personal banker’s compliance responsibilities—the lender will have a much lower return on learning because the course lacks relevance. Since the 2008 financial crisis, there’s been a 40 percent increase in compliance training. Courses assigned from 2010 to 2015 rose 72 percent. But don’t confuse excessive training with effective learning.
• Ensure a connection between compliance issues and compliance training. Too often, these elements live in separate siloes. But training becomes more effective when the curriculum is inspired by the kinds of compliance issues employees encounter in their day-to-day jobs. They’re more likely to retain knowledge relevant to their task. Chief learning officers must remain keenly aware of the compliance issues that face the organization, and that they should fully integrate into compliance training.
• Pick the right training platform. Compliance training options range from traditional face-to-face classroom instruction, to online or e-learning, to a combination of the two called blended learning. Compliance training is not one-size-fits-all. For example, a large national bank that wants to deploy compliance training across its branches and offices might find e-learning most effective. However, it might train its board via in-person instruction. The right platform helps employees retain the lessons imparted.
• Benchmark your compliance programs. Is your training comprehensive enough? Rigorous enough? Current enough? Are your employees becoming expert at regulatory compliance? Or do they fail the grasp what’s at stake? Find out where your organization stands on the spectrum of risk in relationship to peer organizations by accessing benchmarking data. And of course, the 2015 Volker Rule requires banks to enhance their compliance monitoring capabilities and use of data analysis.

A culture of compliance and responsibility should neither wax nor wane based on the regulatory tenor of the reigning administration in Washington, D.C., or in state capitals. The financial services industry will always have regulations. Regardless of whether the rules and regulations are more restrictive or less restrictive, financial services organizations must understand and properly apply them.

For example, the Consumer Financial Protection Bureau released in January a new rate spread calculator for financial institutions reporting Home Mortgage Disclosure Data Act (HDMA) information. If a bank’s training does not include information about the new rate-spread calculator, employees might miss this seemingly simple change. That could risk non-compliance—and jeopardize the bank’s mortgage applications.

It’s the little things that often matter in compliance, which underscores the importance of a culture that relishes acting in the best interest of the customer. It’s vastly different from a culture of fear, where compliance and compliance training are considered forms of punishment.

In a culture of compliance and responsibility that rises above the high-water mark, well-trained employees rest assured in the knowledge that they work for an ethical, responsible organization. They will take more pride in their work … and create a better customer experience.

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Karl Dahlgren is managing director at BAI. He can be reached at [email protected]

With hundreds of high-impact courses serving more than 1,700 financial services organizations, BAI’s compliance training helps reduce risk and administrative burdens while maximizing compliance budgets, creating a more focused and efficient training experience for all.