In any business, it’s important to manage compliance. But for banks, the stakes are much higher. Banks face a unique risk of fines and penalties if they fail to meet the standards set by regulators. And not only can these penalties be costly and difficult to keep up with, but they can also put a bank out of business.

As a result, compliance is often at the top of their list of priorities. There are many challenges that banks face in their efforts to stay compliant, ranging from technology to human resources. And the more complex a bank’s operations, the more difficult compliance can be.

Compliance is often just one part of a larger puzzle, and keeping up with all the moving pieces can be overwhelming. Banks need to manage compliance while also creating and executing new strategies, fostering innovation within their organisations, and improving customer experience. Of the many challenges banks face, the following are among the most pressing.

Banking compliance expenses

One of the top challenges is the cost of banking compliance. Banks spend billions of dollars on risk management, fraud prevention, and security, and this is just the tip of the iceberg when it comes to all the things banks do to stay in line with their own internal policies—and government regulations.

The cost of complying with all of the rules and regulations that govern the financial industry can be staggering, especially as new regulations are constantly being added to the list.

Ever changing regulations

Speaking of new regulations, the financial industry is constantly changing as new rules are implemented and old ones are updated. Banks need to stay on top of the latest news and trends in order to be compliant with laws, regulations, and policies that affect their business.

This can be a difficult task, especially when banks are dealing with a large number of customers or transactions on a daily basis. And it’s not just about knowing what’s expected of them, it’s also about knowing how to implement new policies quickly without compromising security or compliance standards.

Implementing new technologies

In addition to the ever-changing rules, there are also constant changes in technology, which is often referred to as digital transformation in business and tech circles. It refers to the way that companies are looking at their technology needs, and making sure they’re using the right tools for the job. This can be a challenge for any company, but it’s especially difficult for banks because they have to ensure that the technology they use is secure and complies with all regulations.

Newer technologies can also be difficult, even for banking compliance professionals, as new technologies are changing the way banks operate. This can be a daunting task, especially when the bank has to implement several different technologies at once and require their employees to be properly trained on how to use these new systems.

Managing data and cybersecurity risks

Banks, like any other business, are constantly collecting and storing data. Their customers’ financial information is a gold mine for hackers, and if the bank can’t protect it, it’s in serious trouble.

Cybersecurity has become a top concern for banks because they’re constantly under pressure to protect their systems and data from threats. They are required to comply with crucial guidelines like a GDPR checklist while also being able to respond quickly when attacks occur and recover quickly once an attack has happened.

Compliance teams need to be able to store and transmit sensitive information without putting customers at risk, and this means making sure that the right security measures are in place at all times.

This is especially problematic when managing the sheer volume of data that is required to comply with regulations. Managing large amounts of data and ensuring they are safe when it’s spread across multiple systems and locations is a challenge for any organisation.

Greater need for transparency

In the wake of so many data breaches in recent years, banks are under increasing pressure to be transparent about their practices. Regulators want to make sure that banks are following all of the rules and regulations that apply to them, and customers want to know exactly what those regulations are so they can ensure that the bank is taking care of their money responsibly. This is why more and more banks are turning to data analytics to help them meet the new demands of transparency.

Banks must be able to provide proof of compliance in order to keep their clients happy, their investors confident, and the government satisfied.

Final thoughts

It’s no doubt that banks and other finance-related companies face a whole host of challenges when it comes to managing compliance. They must deal with a complex regulatory environment, which can make it difficult to stay on top of all the rules and regulations that apply.

The stakes are higher than ever, as banks face strict penalties for non-compliance. But by taking advantage of innovative technologies and putting the right strategies in place, they can streamline the process, meet these challenges head-on, and keep their businesses running smoothly.

Katie Pierce is a teacher-slash-writer who loves telling stories to an audience, whether it’s bored adults in front of a computer screen or a bunch of hyperactive 4-year-olds. Writing keeps her sane (most of the time) and allows her to enjoy some quiet time in the evening before she walks into a room of screaming kids (all of whom she loves dearly) the next morning.