What is compliance management?

Compliance management processes refer to the ongoing measures an organization takes to ensure all systems, activities, and staff members are up to code on the latest rules, regulations, laws, and more.

Common steps to ensure compliance in the management process often include keeping up with the latest laws and regulations (new and changing), clearly communicating your institute's policies and procedures (and ensuring employees follow them) and running several internal audits to uncover any issues. Compliance management solutions make these steps, and many more, significantly easier to run through.

According to theNational Credit Union Administration, there are at least eight categories credit unions of all sizes must comply with (each has its own set of rules and regulations to follow):

1. CECL(effective for federally-insured credit unions January 1, 2023)
2. Cybersecurity
3. Consumer Compliance
4. Risk-Based Capital Rule
5. Bank Secrecy Act
6. Capital Planning and Stress Testing
7. Fraud Prevention
8. Net Worth Restoration Plan and Prompt Corrective Action (PCA)

And this is far from the only standards and legal framework. There are often dozens of laws and regulations, from employee rights and health and environmental standards to consumer lending and deposit laws.  

Compliance management can be the make-it or break-it of your financial institution. Compliance software is a great way to ensure your credit union is measuring up to standards — and if you're not, your system will identify the issue and notify your compliance managers so you can get back on track.

What software is used in compliance?

In compliance, organizations use compliance management systems to ensure they're taking steps to follow every requirement expected of them in all areas of business. This can add up to be a lot to keep up with, but when institutions leverage compliance management software tools, identifying current and potential issues before they become much bigger problems is quicker and easier. This, in turn, allows you to manage your risks better.

Compliance management tools also allow users to oversee and manage audits, documents, and vendors. Vendor management has become increasingly important over the past couple of years, as studies have shown that 'vendor' oversight is one of the highest risks to compliance that technology can resolve (according to54% of organizations).

How does a compliance management system work?

To stay in line with compliance requirements and regulatory requirements, a compliance management system uses a combination of tools and strategies to identify risks and address them before your credit union is hit with damaging fines and reputation. Tools often include internal and external auditing (third-party vendors), documentation management, reporting, security controls, and advanced digital applications.

Although the system is incredibly beneficial to financial institutions in terms of cutting out complex and tedious work, speeding up task completions, and automating wherever possible, an expert and knowledgeable compliance team is still required. A compliance management system was designed to help optimize employee efficiency and effectiveness while reducing organizational risks and human error — it was not designed to replace the team it relies on.

What are the 4 components of the compliance framework?

A compliance framework is a set of guidelines — often in the form of documents, processes, and systems — that details your organization's structure for achieving compliance with established rules, regulations, and laws. Theseare the four components of any great compliance framework.

1. Documents

• Compliance programs
• Registers
• Policies & procedures
• Work instructions/manuals
• Guidelines
• Templates, etc.

2. Business Systems

These business systems must support:

• Risk management
• Compliance monitoring
• Compliance reporting

3. Business Processes

These processes must identify:

• Risk and compliance  owners
• Clearly defined processes for incident reporting
• Procedures for breach reporting
• Communication processes
• Escalation procedures, and other internal controls your institution is using

4. Related Systems

Must also support:

• Compliance management
• Risk management

What to look for in Compliance Management Software?

When looking for the right compliance solutions for your credit union, you need to evaluate key features of the system to ensure you're getting the best possible software for your institution. These key features can often vary from organization to organization, but there are quite a few that will remain a priority for all, and they include tools for:

• Regulatory compliance
• Compliance reporting
• Audit management  for effectively identifying potential risks
• Legal management
• Regulatory change management
• Policy management
• Easy access to corporate governance
• Centralized compliance activities
• Compliance training, and more.

Meeting overall compliance requirements and policies is essential to the success and growth of your credit union, both among yourcore banking solutions and business units implementing processes independently. In addition to having the necessary tools to set your institution up for compliance success, you should also consider the following when looking for your software.

The software provider's specializations

The compliance management solution you implement in your organization must be one that can adhere to all the unique needs and specifications of compliance in your credit union. Evaluating provider experience and specialization in your specific industry ensures the software can meet and exceed your compliance needs. Not every organization — especially not those in different industries — is the same, and the same software for all will not be successful for all.

Ability to guarantee data safekeeping & integrity

Can the software you choose guarantee a security framework that keeps your data safe? Security breaches are a common issue for businesses, even more so for an institution responsible for financial services and data, so it's non-negotiable that your software provider has the steps in place to protect you and your system from being vulnerable to these attacks. This is especially true since most organizations don't expect it to happen to them despite the U.S. experiencing the most data breaches (reaching more than212.4 million in 2021 compared to 174.4 just the year before).

Multi-level capabilities

Most compliance tasks and assignments your team initiates go through several lines of approval before being submitted. This is crucial to limiting errors and risks, but it can also be a hassle if it requires regular meetups outside of the software to complete. When the compliance management software you use already has multi-level capabilities, you can streamline and optimize the efficiency of completed compliance responsibilities.

Benefits of a compliance management solution for credit unions

The most obvious benefits of compliance management software solutions for financial institutions are improved risk management, meeting complex compliance requirements and regulatory compliance in heavily regulated industries, and keeping up with the latest changes and new additions to laws.

When you implement the right system, compliance management software helps financial service providers in more ways than just the basic benefits of easier compliance management. It also helps with the following.  

Eliminate manual processes

Manual processes come with many problems, including delays, wasted time, repetitive work, miscommunication, and additional challenges to overcome when trying to make your credit union more competitive and efficient. FinTech and neo-banks are quickly dominating the industry (for now!) because they're leveraging digital solutions. Eliminating manual tasks in your compliance management means:

• Employee time is spent on more important compliance matters (40% of work time is wasted on repetitive manual tasks)
• Improve end-to-end visibility across your systems (according to67% of organizations)
• Streamlined work processes and easier scaling (according tomore than 80% of business leaders)
• Reduced errors (cited by66% of respondents)

Centralize compliance

Centralize all of your activities, processes, documentation, etc., in one location where your team can easily track, monitor, and review your credit union's compliance. Centralizing every area of compliance in one system will ensure that your financial institution is optimized to established rules and requirements by providing your team with a holistic view of where you stand in compliance and potential risks that could throw you out of line. It also means better organization, searchable files, automated management, and regular monitoring and analytic capabilities.

Stay informed

Keeping up with new and changing laws is only one component of staying informed that a compliance management solution can offer your credit union. There are a lot of complexities and challenges that go with following every rule financial institutions must comply with, and having a system designed to leverage numerous tools and methods for keeping you informed and in line is crucial to thriving in the digital era of the financial environment.

Cotribute: your trusted solution to thriving in the digital era

Accelerating your credit union's growth in today's environment means implementing digital solutions into your user experience, business processes, services, and more. The power of digital is in the way that it can streamline your work and ensure compliance, level up your customer experience, and make you a competitive force against D2C FinTech and neo-bank companies. Learn more about Cotribute and our white-labeled solution for credit unions byscheduling a demo to tour our platform.

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