Navigating Compliance Through The Oceanic Currents of Banking

A Guide to: Everyone’s Banking Platform: Compliance as a Driver of Banking Performance

Adam Gable
Adam Gable – Product Director – Financial Crime, Treasury and Risk

In the vast expanse of the banking industry, compliance is often likened to the ever-shifting currents of the ocean—sometimes turbulent, sometimes calm—but always influential in shaping the course of financial institutions. In a recent white paper by Temenos, titled Everyone’s Banking Platform: Compliance as a Driver of Banking Performance, the metaphorical journey through these compliance waters reveals intriguing insights into how strategic investments can transform regulatory obligations into opportunities for enhanced financial performance.

The Mandate of Compliance

Regulatory compliance, while often viewed as a mandatory and burdensome aspect of banking operations, is a vital component that ensures stability, security, and ethical standards within the industry. Just as a ship must adhere to maritime laws to navigate safely, banks must implement controls, processes, and systems to meet the ever-evolving requirements set forth by regulators worldwide. Failure to comply not only carries significant financial implications but also jeopardizes reputation and customer trust—a storm no bank wishes to weather.

The Cost of Navigating Compliance

However, compliance comes at a cost—a necessary investment in safeguarding the integrity of banking operations. According to the Temenos Value Benchmark (TVB), banks allocate an average of 6.7% of their revenues to compliance-related expenses, with a substantial portion dedicated to full-time employees. These costs, though significant, are essential for ensuring adherence to regulatory standards and mitigating operational risks.

The Ripple Effect of Compliance Investments

Yet, amidst the perceived burdens of compliance, there lies a hidden tide of opportunity. The TVB reveals that banks with efficient compliance functions not only meet regulatory requirements but also experience positive impacts on their financial performance. Efficiency in compliance staff correlates with higher returns on equity (RoE), underscoring the symbiotic relationship between regulatory adherence and profitability. Furthermore, as banks embrace digitization, the efficiency of compliance operations sees a corresponding rise—a testament to the interconnectedness of technological advancement and regulatory efficacy.

Charting a Course for Financial Success

In conclusion, the white paper illuminates the direct correlation between effective compliance practices and enhanced banking performance. Compliance should not be viewed solely as a regulatory burden but rather as a strategic opportunity to mitigate risks, bolster customer trust, and drive overall digitization. Just as a skilled navigator charts a course through treacherous waters, banks that invest in robust compliance frameworks position themselves to sail towards greater financial stability and success.

About Temenos

Temenos, the world’s leading open platform for composable banking, empowers financial institutions worldwide to navigate the complexities of the industry with agility and innovation. With a commitment to driving positive change through technology and expertise, Temenos continues to shape the future of banking, creating opportunities for billions across the globe.

In the ever-changing landscape of banking, compliance remains a constant force—a guiding beacon that ensures integrity, resilience, and trust. By embracing compliance not as a mandate but as a strategic imperative, banks can harness its currents to propel them towards a horizon of sustainable growth and prosperity.

Please download a copy of the document here.

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Adam Gable
Adam Gable – Product Director – Financial Crime, Treasury and Risk