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Leveraging Technology to Ease the Compliance Burden

Leveraging Technology to Ease the Compliance Burden. October 10. 2012. Shirley W. Inscoe, Aite Group George Kunkle, Capital One. Agenda. Compliance burden in the U.S. CIO survey of technology investments Planned IT spending Capitol One introduction. Recent headlines…. Compliance burden.

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Leveraging Technology to Ease the Compliance Burden

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  1. Leveraging Technology to Ease the Compliance Burden October 10. 2012 Shirley W. Inscoe, Aite Group George Kunkle, Capital One

  2. Agenda • Compliance burden in the U.S. • CIO survey of technology investments • Planned IT spending • Capitol One introduction

  3. Recent headlines…

  4. Compliance burden Achieving and demonstrating compliance has assumed a life of its own. It has evolved from simply complying with regulations to “managing compliance”, essentially a separate line of business. Unfortunately, a LOB with all costs and no revenues. As financial institutions strive to demonstrate compliance, it is crucial to: • Document plan • Perform and document risk assessments • Cross all t’s, dot all i’s • Document shortfalls and correction plan with timeline • Manual and automated testing • Retain all testing results for review by regulators, internal and external auditors, etc. • Document, document, document Compliance must be managed like any other business, including making smart decisions with regard to technology investments…

  5. Compliance burden rate of growth • The rate of growth in the cost of compliance is escalating rapidly. • Between 2009 and 2011, compliance costs rose alarmingly at community banks • For the median respondent with assets of $470 million, compliance costs rose to $185,000 in 2011 from $131,000 in 2009, nearly a 19% annual increase. • For the average respondent with assets of $627 million, compliance costs rose nearly 10%, to $346,000 in 2011 from $288,000 in 2009. • 70% of executives polled predicted compliance costs will continue to grow between 14% and 25% annually • Only 15% of executives felt compliance costs will stabilize in coming years Source: Compliance Burden on Community Banks, BAI’s Banking Strategies, Arthur L Loomis 2nd, April 25, 2012 This rate of growth is unsustainable, and leveraging technology to ease the compliance burden is essential… Largest institutions may choose to develop In house solutions while smaller ones must often turn to third parties.

  6. Survey of senior IT executives at large banks around the world Source: Aite Group survey of banks with over US$10 billion in assets around the globe, Q2 2012

  7. Survey of senior IT executives from large banksaround the world Source: Aite Group survey of banks with over US$10 billion in assets around the globe, Q2 2012

  8. Insights into spending directions Source: Aite Group survey of banks with over US$10 billion in assets around the globe, Q2 2012

  9. Insights into more granular levels Source: Aite Group survey of banks with over US$10 billion in assets around the globe, Q2 2012

  10. Questions? • THANK YOU • Shirley W. Inscoe • sinscoe@aitegroup.com • George Kunkle • George.Kunkle@capitalone.com

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