Any compliance professional will tell you: Compliance is a big lift these days. The stakes are higher than ever, and the changes are coming at a breakneck pace. But at many credit unions, it is still a battle to convince senior leadership to invest in compliance, simply because compliance is not a revenue generator.
Whether you’re looking for investment in the form of additional staff or a tool like a compliance management system, as the NCUA recommends, you’ll have to make the business case. Rather than just spelling out the reputational and financial risks in ALL CAPS, use these pointers to build a solid case.
- Estimate how much you’re spending on compliance
A tool like the CUNA Regulatory Burden Calculator is a good place to start estimating your compliance costs. This calculator breaks down your regulatory costs and provides a scorecard for comparison against a peer group, according to asset size. Benchmarking your costs against those of other credit unions in your asset class size can help you build your argument for investing in compliance resources that can save your credit union in the long-run.
If you’re thinking about going the route of getting a compliance management system, take into consideration the fact that compliance is not the only business area that can benefit from such a software solution. Departments as diverse as HR, lending and marketing can also benefit from the range of features, including policy management, reporting, cost tracking, advertising review and regulatory alerts. You may be able to share the costs across departments. Don’t be afraid to talk to HR and others who would benefit from streamlining their work with a compliance management system to factor in their potential cost-savings.
- Estimate cost savings through efficiencies
Some solutions may cost at the outset, but those costs can be offset through gained efficiencies. What if you were able to save 5% on labor? A compliance management system automates otherwise manual processes, helping limit duplicate efforts. While features can vary from system to system, some of the functions that you could save time and increase efficiencies are:
- Guided workflow with regulation change alerting
- Compliance review tools
- Approval management
- Policy & document management
- Training management
If you could free up time for your compliance team to work on other tasks because you could take advantage of one of these features what could be done better?
- Map out the risks of non-compliance
Does your credit union truly understand the potential impacts of non-compliance? If you’re already undertaking risk assessments as part of your compliance program, include some of this information as you make your investment case.
- Consider the risk of litigation
Whether you look to credit union compliance training or a compliance reference resource like CUNA RegTraC, investing in keeping your staff knowledgeable about regulations can be a powerful tool in your risk reduction arsenal.
As David Reed of Reed & Jolly recently said, “The pandemic response may mean that credit unions are going to see more flexibility than they’re used to from examiners and regulators. But that doesn’t mean they should expect consumer protection attorneys to take it easy on them. You have to know your stuff.”
While you can’t anticipate whether you’ll be the target of litigation and fines, it’s hard to calculate the ROI of investing in compliance resources. However, a long-term investment in a compliance management system that creates process efficiencies has clear benefits for your credit union.
Here’s the bottom-line: NCUA guidelines strongly recommend incorporating a compliance management system, whether you use Credit Union Compliance Management System (CU CMS) or something else. And you may also just need to invest in training to keep your staff completely up to date on today’s ever-evolving regulatory landscape.
Presenting a strong business case to your leadership team will win the day in the end.
Need help making the case for a CMS? Reach out to our team for a quote, and we’ll be in touch to help you make the case. Contact us today.
Tracy Blaske is director of compliance solutions at Credit Union National Association. Prior to joining CUNA, Blaske had a 17-year credit union career where she held the positions of Human Resources Director, Security and Compliance Officer, Vice President of Operations and CEO.