Integrated compliance the key to boost productivity

05-Dec-2014

By Krystine Lumanta

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The compliance and business operations of companies are set to become much more integrated, particularly as the financial services industry seeks to achieve greater productivity.

Software solutions provider Holocentric chief executive Bruce Nixon said businesses will not have any choice but to combine these components.

“One of the things that came out of the Murray inquiry interim report was that the productivity of growth will not be able to sustain the same rate of income growth experienced over the past decade, and that the financial system has an important role to play in facilitating higher productivity,” Nixon told financialobserver.

“So, as a country, we don’t have any choice but to become more productive, hence integration of compliance and operations is a natural thing to [emerge], and today there is no excuse.

“A decade ago, it might have been that technology wasn’t quite there to enable us to do that very effectively – it was a difficult exercise and very error-prone – but today, the technology is available and we’re seeing a greater acceptance of that approach, as well as an understanding that this is now possible.”

Traditionally, when businesses made changes to ensure compliance with new laws or regulations, it was approached on a “project basis”, Nixon said.

“If someone has been given the task of making sure the company is compliant with Dodd-Frank [Wall Street reform] or whatever the Murray inquiry may come out with as far as new regulatory obligations, for example, people undertake that as a project to make sure that they implement that system or obligations into the organisation,” he said.

“But it becomes complex when you have to review all of the business’s operating procedures and modify each of those, and imposes greater costs and loss of productivity across the whole organisation.”

In addition, information was dispersed across multiple documents rather than incorporating one reference point to a regulation, one reference to that process and one reference to that product, Nixon said.

“When it’s dispersed it becomes uncontrolled, whereby it becomes difficult to get a handle on achieving a consistent understanding of the implications of that change,” he said.

“When you identify a process and policy [just] once, the complexity becomes better managed, more seamless, less error-prone, there’s a lot less rework and ultimately greater productivity.

“You’re building up a knowledge base, which then remains with the organisation.

“So if people move on or retire, you’re not losing all that know-how of those people - you’re actually retaining it as an organisational asset.”

He said time and costs were key barriers to undertaking these changes.

It was also critical for businesses to have someone with direct responsibility or assigning accountability, Nixon said.

“Typically we find that when it comes to compliance and operations, because the responsibility has spread through the organisation, we find that there is no one point of accountability,” he said.

“But where someone is assigned that accountability to build that knowledge base and understanding of how things work, then it gets driven very effectively.

“It also typically has to come from a very senior person - perhaps the head of the organisation or someone very close to that individual.”

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