Lenders - Moving Compliance to the Cloud
Since 2008, financial institutions (FIs) have faced an ongoing challenge to implement updated regulations into risk and operations. Regulations now seem to change on such a regular basis that risk, compliance, and operations have had no choice but to increase staff. What's been missing are simple and effective technology solutions that scale. Until now.
Moody's Analytics put together an interesting paper on the topic that was used as the basis of this article. Access their paper HERE.
Total Cost of Ownership
The main technology costs driving total cost of ownership (TCO) relate to the development and maintenance of software. Armies of software developers are employed by financial institutions, with as much as 70% employed simply to maintain "the system." Here's a partial list of some of the costs associated with on-premises solutions: Hardware, software licenses, installation fees, support, training, maintenance, integrations, upgrades, back-ups & disaster recovery, technology upgrades, etc.
The cost of running and maintaining in-house developed applications continues to grow exponentially.
Off the shelf packages require varying levels of customization, maintenance, and support, all contributing to costs. As a result, many FIs have opted to delay implementing changes to systems and instead risk non-compliance.
Costs are greatly reduced when FIs opt for implementing software as a service (SaaS) solutions. Suppliers ensure compliance. Multi-tenancy shares the costs across all customers which allows them to drive costs down and eliminates maintenance & development costs associated with software developed in-house for similar purposes.
What about Security & Privacy?
Financial institution executives have been reluctant to make the switch to cloud-based solutions, pointing to security and privacy issues. But attitudes are changing. Vendors have the ability to implement and maintain multi-level security, user/role-based access permissions, and locked-down data.
Moving to the Cloud
Financial institutions are looking for ways to meet their regulatory requirements and increase operational efficiency. Eliminating and reducing many of the costs associated with developing, updating, maintaining compliance systems in order to meet regulations is possible though regulatory compliance as a service (RCaaS) platforms.
There are many benefits to moving to a RCaaS platform besides cost reduction. They include: Easy to implement, real-time regulatory updates, communities (where people in similar roles collaborate), scalability to meet demand, security, transparent pricing, easy to switch vendors if not satisfied.
Attitudes about cloud-based regulatory compliance solutions are changing. More financial institutions are making the switch to RCaaS because costs are greatly reduced, implementations are easy, and the services scale with demand.
Christopher Bisson is the CEO of Value Connect Inc., an RCaaS company specializing in automated appraisal management solutions enabling financial institutions to increase efficiency and eliminate risk. Reach him at 226-251-0108 x4250.