A Sustainable Approach to Bank Compliance

While speed is essential, that approach isn’t always the best solution now that recent bank failures, high-profile compliance cases and heightened scrutiny have brought one regulatory challenge after another. Regulators remain focused on preventing a repeat of the bank failures from a couple years ago.

As many banks face ongoing matters requiring attention (MRAs or MRIAs), leaders must strike a balance between rapid remediation and implementing sustainable processes to prevent recurring issues, whether these are in the area of consumer compliance, financial crime prevention or cybersecurity. A quick fix does little good if the issues are not completely addressed or begin to reoccur—leaving banks back at square one.

Some institutions are meeting these challenges with significantly larger remediation budgets than they had five or 10 years ago. They are allocating more resources to the people, technology and processes – including audits and validation – to address issues before they trigger regulatory scrutiny. That’s a start. However, a “boil the ocean” approach should not be the goal either.

Strong leadership is crucial for developing strategic, long-term remediation plans that yield sustainable solutions. While large consulting teams may offer a quick solution, they can be costly and may not address the root cause of the issue. What regulators are looking for is whether remediation efforts are durable and integrated into everyday operations. That means examining subtle details and making sure all of the moving parts are aligned.

Accepting fines as a cost of doing business no longer cuts it – and fines are not the only expense. A $1 billion penalty might seem astronomical, but it may be the least expensive part of a remediation.

While there may be expectations of some deregulation or easing of regulatory pressures with changes in administration in Washington, D.C., foundational expectations remain. As they are the backbone of our economy, banks are always under scrutiny. Banks cannot assume that enforcement actions will simply disappear with political change.

To successfully remediate their programs from regulatory scrutiny, banks should work with knowledgeable and experienced professionals to:

• Translate enforcement regulations into appropriate scope and actionable plans. Banks must grasp what an enforcement action means to their operations, what steps they must take to fix problems and the likely cost in time and resources.
• Execute on plans more effectively. An action plan is worthless if it isn’t implemented. Making the most of knowledgeable resources and knowing when to accelerate an action plan are essential.
• Anticipate pitfalls so they avoid repetitive missteps. Although a single bank may not have seen a problem before, many institutions share common challenges. A trusted advisor can leverage valuable knowledge and experience to offer practical solutions.

Although 2025 may bring a more business-friendly environment, banks will best position themselves for sustainable success by adopting long-term solutions to compliance challenges. An engaged executive leadership team with the right budget and team in place can be valuable, but so is a compliance-focused mindset.

Spotting problems before they become regulatory issues will be key – and that’s where an objective third party can bring fresh perspectives. For instance, selecting the right technology can lead to more sustainable and operationally efficient solutions. With rapid advancements in technology, outside advisors can help banks navigate emerging innovations and make informed decisions that align with their strategic goals.

Ultimately, bank executives who embrace advice from trusted advisors will be well-positioned to make sound judgment calls. The business environment is changing more quickly than ever. As penalties and remediation costs surge, proactive measures can help mitigate risk and position banks for sustainable compliance.