How Companies Can Build The Foundation For Better Compliance With Blockchain
Despite stringent policies, the financial services industry still has instances of regulatory oversight. The financial services industry is also under pressure, with many new policies mandating that more data be reported in less time. Firms must learn the stipulations of each new piece of legislation and develop a compliance solution before the date of enforcement, which is when compliance is enforced and penalties for non-compliance are imposed.
Navigating regulation is a difficult task for financial institutions because new and revised policies are constantly on legislative agendas. As many financial institutions have global reach with multiple product offerings, they may face compliance with over 400 regulatory and rule-making entities. As a result, many financial institutions find it challenging to meet the rising demands from numerous regulators in various jurisdictions.
Aside from the sheer volume of incoming financial policy, legislation frequently contains requirements that significantly evolve from the draft stage to final rulemaking, causing firms to postpone critical decisions on how to implement compliance solutions. The proposed draft can be quite different from the final rule as revision stages and responses to consultation papers prompt changes to address industry concerns.
Financial institutions are scrambling to meet the final requirements as enactment day approaches. Firms that are short on time typically resort to interim solutions. Such solutions are frequently expensive and additional systems are layered on top of pre-existing ones, resulting in a tangled web of integration. Despite being implemented with the intention of increasing automation in the compliance process, solutions still necessitate extensive manual reconciliation work. Furthermore, interim solutions may only meet the requirements of a single incoming regulation; thus, a new regulatory regime may necessitate a plethora of interim solutions.
Compliance systems struggle to quickly adapt as new regulations typically call for more reporting data. A compliance software solution must attempt a firm-wide integration of various, disconnected data streams to comprehensively record and aggregate reporting metrics. Effective data integration has historically been difficult to implement for all types of enterprise systems, let alone a compliance system.