Beyond Compliance - The Road to Competitive Advantage Part 1

I was encouraged to listen to the opening address at last week’s SWIFT Business Forum London where Arun Aggarwal, Managing director, UK & Ireland for SWIFT, talked about Thinking beyond compliance: turning challenges into opportunities. This concept is something I’ve been talking to people about for some time now and was the key theme of my own company’s Financial Services showcase event last year.

Sounds simple doesn’t it? If you get past the tutting and gnashing of teeth and consider that regulation, although often losing its way somewhat en route to implementation, is by-in-large geared around what good business practice should look like, then rather than fighting against the inevitable, organisations should adopt the stance of not just looking to comply, hence keeping the regulatory wolves from the door, but actually use the regulatory impetus to change the business and supporting IT for the better.  Given that the plethora of regulation is one of the main challenges facing Financial Services organisations, is increasing and is (generally speaking) inescapable, how banks and other FS organisations deliver and exploit regulatory compliance alongside everything else on their plates is going to be a key performance differentiator, whether they realise it or not.

Most Financial Services organisations are faced with a witches brew of challenges across M&A activities, including dealing with the legacies and tidying-up-afterwards exercises; the need for business innovation and transformation as the bar is pushed ever higher by non-traditional competitors and customer expectations; to grow revenue, profit and deliver shareholder return against an extremely challenging economic environment; and the flip side to drive cost reduction/simplification initiatives; not to mention a significant portfolio of general BAU/”keep the lights on” activity. No wonder regulatory compliance is about as welcome as… well a banker most places these days.  Most regulatory projects end up delivering tactical point solutions to achieve tick box compliance. Regulatory projects are usually characterised by the mindset to deliver minimum capability required to comply, minimal investment, hard deadlines and “backs to wall” delivery pressure - usually starting late and not helped by lack of timely and stable regulation. They are also rarely staffed by the organisation’s “A” team. Sorry guys.

In the current environment more than ever, minimising the actual cost and opportunity cost of regulatory compliance is imperative to business success. BUT there is more to it than that - treating compliance as an avenue to drive competitive advantage, just like having the best customer service or most innovative and desirable products. It may be less sexy – a lot less sexy let’s face it – but if you can successfully piggy back some real above-the-line business benefits off a regulatory change or deliver that new reg report just-like-that while your peers scurry off to create yet more architectural complications or end-user-computing mess, then who is going to be smiling in the end.

More on how you go about using compliance for (even greater) good in part 2, plus the idea that like many things, you should think about measuring how good (or not) you are, try to get better, chart your progress and benchmark versus the competition. May sound crazy but might just be something in it…