Credit unions are known for their personalized financial services, not just for profit. But in recent years, they’re facing the increasing cost of compliance, specifically amid shrinking budgets. With annual regulatory changes and state laws, it can be a daunting task for credit unions to navigate the compliance landscape while keeping their costs in check. To remain competitive and compliant, they need to be strategic in their approach to confront and minimize these costs. That’s why in this blog post, we’ll discuss how credit unions can effectively deal with the rising cost of compliance amid shrinking budgets.
Conduct a Compliance Risk Assessment
The first step is to evaluate and identify the existing risks and compliance gaps within your organization. By conducting a compliance risk assessment, credit unions can detect and analyze areas that need improvement. This can help create an action plan to mitigate risks and keep compliance costs in check. Remember, a costly audit and potential fines or fees usually exceed the cost to proactively mitigate possible compliance issues. Implementing a risk management program can also ensure that you continue to keep up with industry standards and regulations, including cyber risk assessments that are widely expected and a must for financial institutions.
Develop a Compliance Budget
Whether we like them or not, compliance costs are a standard operating expense for credit unions, but proactive measures can help balance the budget. Before preparing your annual budget, identify and evaluate your compliance expenses. Consult with in-house experts and outside consultants to ensure that you’re within budget constraints and regulatory requirements. Ensure that you allocate enough time, personnel and resources to operate compliance functions, whether internal or outsourced. Budget planning can be arduous, but it’s necessary for all parts of the credit union’s operation.
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