Traditionally, the testing aspects of a Compliance Management System (CMS) has been conducted in a “check the box” fashion, leading to “after the fact” or reactive discovery and analysis to identify compliance issues and control breakdowns. Due to the heightened regulatory scrutiny over compliance, an increase in consent orders and the pace of regulatory change, institutions are seeking assistance with CMS transformation initiatives to proactively identify and address compliance issues before they escalate to possible regulatory action. Conversely, there is broad pressure to lower compliance costs while seeking technology-enabled transformation opportunities to move beyond “check-the-box” testing focus and to provide more meaningful insights that translate into tangible business value.
At the cusp of this industry-wide transformation initiative is the early stage adoption of Real Time Compliance (RTC): a confluence of emerging technologies such as big data, machine learning, text-mining, and predictive and behavioral analytics with enhanced visualization and data discovery capabilities. RTC is an emerging trend that utilizes technology to effectively alert a company to possible non-compliance “triggers”. One approach is based on defining metrics, such as defining Key Risk Indicators (KRIs) and Key Performance Indicators (KPIs) with corresponding thresholds to trigger as events-of-interest occur, allowing opportunities for timely root cause analysis and corrective action to take place before these events build to significant impact in scale or scope.
As firms look to develop their compliance capabilities, they must first establish a foundation of robust compliance testing data, technology, controls, and processes before they can progress to enhanced monitoring and surveillance capabilities. By enhancing surveillance capabilities, and leveraging emerging technologies to use structured and unstructured data, institutions are beginning to evaluate options to achieve RTC and shift the costs of compliance to investments which produce more proactive, accurate, and actionable outcomes.