Banking Compliance Index Holds Steady in Q3, Still No Signs of Reg Relief

Banks and credit unions must find ways to better manage compliance ahead of a busy year end.

NEW HAVEN, CT (October 30, 2018) — The Banking Compliance IndexTM (BCI) remained steady in Q3 2018, after nearly doubling from Q1 2018 to Q2 2018. The spike in regulatory activity from earlier this year demonstrates the significant impact of regulatory relief bill S.2155, which contained over 50 separate regulatory changes. Even though regulatory relief has been promised, financial institutions still have not experienced any regulatory lift.

The Banking Compliance Index, published quarterly by Continuity’s Regulatory Operations Center® (ROC) quantifies the incremental burden on financial institutions in keeping up with regulatory changes. The typical community financial institution needed more than one full-time employee (1.05) just to keep pace with regulatory changes, not including the resources institutions are already dedicating to regulatory and compliance efforts.“The sustained increase in regulatory activity compared to the beginning of the year reinforces that banks and credit unions have yet to feel any concrete relief resulting from bill S.2155,” stated Pam Perdue, Continuity’s chief regulatory officer. “During Q3, institutions were once again faced with reading, analyzing and interpreting a significant number of pages and regulatory material, costing too many resources and employee hours. This is simply too much burden for the typical financial institution to reasonably maintain with manual processes.”

There were 59 issuances delivered between July 1 and Sept. 30, 2018, on par with the 61 issuances the previous quarter. Compliance costs at the typical institution averaged $15,534, and 304 hours were required to comply per institution.

“The last quarter of the year is typically the busiest in terms of regulatory activity, and we expect that trend to continue as 2018 comes to a close,” Perdue explained. “To complicate matters further, the upcoming midterm elections have the potential to significantly shake up the regulatory landscape, prompting even more work for banks and credit unions. Bankers must find ways to stay proactive and automate large portions of their compliance management, or they risk falling behind. Savvy institutions are looking to regtech partners and technology to boost efficiencies, reduce employee time dedicated to compliance and streamline the overall compliance management process.”

About the Banking Compliance Index™
The Banking Compliance Index™ (BCI) is a quarterly tracking index published by Continuity’s Regulatory Operations Center®. It measures the incremental cost burden on financial institutions to keep up with regulatory changes.

The BCI is calculated each quarter using a multivariate analysis that can be weighted across different contexts and is calibrated to determine the regulatory impact on financial institutions of varying sizes, product mixes and regulatory oversight. Key indicators include volume, velocity and complexity of regulatory change; time expended to meet regulatory requirement(s); and supervision and the enforcement climate. The BCI data sources include CFPB, FDIC, FED, NCUA and OCC. The BCI is calculated using the statistically average size of a domestic financial institution, currently $350 million according to publicly reported data available from the Federal Deposit Insurance Corporation.

Access the original press release here: Banking Compliance Index Holds Steady in Q3, Still No Signs of Reg Relief