Transforming Compliance into a Competitive Advantage

Regulatory compliance is costly for financial organizations. It requires significant levels of effort, time, staffing and investment. When all is said and done, becoming fully compliant with the latest regulations just preserves the ability to perform business as usual; it offers very little immediate return. Right?

Not exactly! In our bid to comply with the sweeping mandates of Section 1073 of the recent Dodd-Frank legislation, compliance teams at both Wells Fargo and ACI Worldwide ended up revising and maybe reinventing the compliance process. Working closely together, we built repeatable processes and procedures and were able to meet the requirements of the regulation. While the requisite investments were not small, neither were the returns. Working together both organizations have developed the playbook for regulatory excellence. It is one which enables us to meet the challenges of future mandates confidently, efficiently and with an eye toward better positioning us both to seize future opportunities.

Our success was due to a fairly straightforward strategy that could be replicated by any interested party. The conclusion we drew is that by treating compliance as a differentiator not only simplifies and streamlines the compliance process it can put us ahead of the competition in terms of overall efficiencies and even time to market with new products.

Both ACI and Wells Fargo attribute our success in developing a differentiating center of excellence to three distinct factors. First, we made a conscious effort to transform compliance from a reactive task to a proactive repeatable business process. Rather than waiting until the last minute, Wells Fargo set the plan in motion more than a year ago. While Wells Fargo has its own internal compliance team, it became clear early on that the complexity and pervasiveness of Dodd-Frank required additional bandwidth and expertise.

Second, we ensured our team composition truly mirrored the importance of the initiative to the business as a whole. The combined team from both Wells Fargo and ACI has a high level of regulation expertise and are adept at building, testing and modifying key banking and software systems. Not only are these people experts, but they are all fully focused on compliance. While both parties realized the need to keep the initiative as cost-effective as possible, we also realized that having the right type of team was the one area that we could not compromise. It’s better to spend on expertise up front than waste time, and money, fixing rookie mistakes down the road.

Finally, our focus on communications ensured the two teams worked seamlessly as one. We designated certain ACI team members to work closely with Wells Fargo, and implemented weekly status meetings for the combined team. We also opened up the lines of communications between senior managers at both Wells Fargo and ACI. This ensured that while primary staffers were focused on specific tasks within the project, upper management stayed in the loop and could reiterate goals and provide direction as needed.

Compliance is not an effort that you can delegate and forget. True success requires top-to-bottom engagement.

While complying with Dodd-Frank requires hours of application and process testing, remediation and proof of compliance, our head start, breadth of expertise and senior management buy-in gave us substantial advantages. It enabled both of us to confidently devise a plan of action, implement an iterative testing and certification process, and quickly overcome any obstacles along the way. Our process ensured an efficient well-managed project that ably contributed to both firms’ current and future financial well-being.

As the business of financial institutions grows increasingly complex, due to globalization, mobility, automation and more, so too do the regulations that govern them. This complex compliance climate is already the new normal, a state where tracking and ensuring compliance is just another accepted cost of doing business. Like any cost of doing business, however, the more efficiently it’s managed the better off the business is as a whole.

Keith Theisen is the head of treasury management products at Wells Fargo, and Jonathan Eber is a director at ACI Worldwide.