Turning compliance into competitive advantage

Finance and risk teams face a future set with new challenges. Geopolitical and macroeconomic headwinds, combined with increasing regulatory requirements, make it hard for leaders not to act reactively. The most forward-thinking businesses are acting with long-term vision. They are seeing compliance not as a burden, but an opportunity for transformation and competitive advantage. 

In the first of our series of webinars about compliance we’re running with Deloitte, Charlie Platt, President of EMEA at SAP Fioneer; Frank Hammann, Head of Finance and Risk at SAP Fioneer; Andrew Berry, Director, Risk Advisory at Deloitte; and Jamey Whitnall, Partner, Financial Services at Deloitte sat down to discuss how progressive banks, insurance firms and other businesses are realizing the strategic opportunity and business value of compliance. 

‘What differentiates the ones that are stepping ahead from those that are just compliant is a long-term perspective,’ said Frank. ‘They don’t see it as a one-time investment in a custom solution for an exact requirement, but a broader architecture that can be turned into business value.’ 

Watch the webinar

Gain insights into a comprehensive approach and integrated architecture which leverages regulatory initiatives to deliver a finance transformation that drives business insight and value.

Turning compliance into competitive advantage - SAP Fioneer - Deloitte - webinar

Long-term vision, short-term milestones 

So businesses need clarity early on about the objectives and outcomes of their compliance programs. ‘When I look at programs that have been successful and those that have struggled, what really differentiates them is that absolute clarity of vision,’ says Jamey. ‘Where the organization is going, what it’s going to achieve, and what it will be able to do.’ 

This vision acts as a north star. As an organization works through compliance-related initiatives, they will take multiple decisions, things will change and the world outside will impact them in ways they hadn’t thought about. But with that clarity, they can adjust to new circumstances while the tech and data infrastructure stays aligned with the long-term objective. As Andrew put it, ‘[It’s about] trying to make sure that there’s a clear line of sight between your regulatory deliverables and the achievement of the strategic vision in the architecture.’ 

But businesses should also build in short-term wins: a small, initial proof point that quickly demonstrates the value of a solution, by, for instance, showing how it will reduce costs. This helps get executive buy-in early on and builds sponsorship across the business.

Compliance-powered innovation 

The key for compliance-powered innovation is anticipating change. Scanning the regulatory horizon puts businesses on the front foot. If businesses understand where regulators are trending and what’s coming down the track, they can preempt the risks – and the opportunities. 

For example, rather than building a solution for one specific reporting requirement, a business could work towards a more open data system. One that would allow regulators to dig around into the data themselves, rather than the business having to regularly generate new reports. This sort of system is likely a way off, particularly in the UK and Europe where mature financial firms are burdened with legacy tech and custom code. But in Africa and APAC, the open data pool idea is gaining traction. It offers a way for businesses to differentiate themselves. Not just in terms of regulatory compliance – which could be a competitive advantage in itself, being seen as an innovative, responsible business – but also in terms of the future use cases this transparent data model could power. 

The tech requirements of risk management

Businesses can also use current regulatory pain points to drive the case for transformation. 

‘I’ve got one bank I’m working with that, to satisfy a regulatory question, has to tap into 20 different data warehouses,’ recalls Andrew. ‘They’ve been able to use this pain point to justify the business case to build an integrated architecture with real time and batch processing, to really give them a step change in where they need to be – not only external reporting, but also internal reporting capability.’ 

Risk and finance teams can use new and existing regulatory requirements to prompt and shape internal conversations about the sort of tech solutions they will need. This allows the business to deploy solutions that don’t just meet the specific regulatory case, but also build the foundations for future use cases.

The finance function as driver of change 

The CFO and finance team have a big part to play. CFOs were traditionally seen as the ones who put the brakes on, rather than the ones who release opportunity. But now, data-intensive compliance initiatives allow the finance function to own and drive transformation across the business. ‘The really forward-thinking CFOs are not just thinking about using data for their regulatory capabilities,’ said Charlie. ‘They’re thinking about how they can actually add value to the front line.’ 

Jamey recalls working on a recent transformation project with a global insurer: ‘When we sat down and talked about the objectives and the outcomes, the first topic that came up was to transform the finance function – and then the whole business – into a data-driven organization. I certainly wasn’t having those types of conversations with CFOs five, ten years ago.’ 

Proactive risk and finance teams are realizing that the data-intensive solutions that are needed to help fulfil new regulatory requirements can also be used to help the wider business make better decisions. For example, they can use stress testing calculations to drive better lending and pricing decisions at the front line. 

Compliance data solutions as a competitive advantage 

Having ready access to the right data is key for complying with new reporting standards. 

With a subledger, for instance, businesses can dig into the data of their ledger at a more granular level. In terms of compliance, this allows businesses to run carbon accounting and reports on the climate risk on credit. But it also allows forward-thinking teams to manage any finance products as a separate sub-ledger. They can acquire instant financial insight at any level of detail for analytics and reporting, or share with the wider business. 

And this sort of data sharing is key as we move towards a more connected model of financial services. Embedded finance data models quickly become complex, as they merge with other functions. To realize the opportunities and know exactly what value they drive, businesses must first have clarity on their own data, have a single source of truth, so they can leverage these opportunities with confidence and streamline product delivery. 

In other words, the sort of data architecture necessary for compliance also allows businesses to bake that capability into other areas of the business. Data flows more efficiently throughout the organization, breaking down traditional silos and enabling the front office to make better decisions and deliver quickly and at scale. 

The right partner 

The most successful organizations address regulatory challenges holistically. Rather than building report-specific solutions, data platforms, reconciliations and adjustments, they address the core issue: provisioning a unified, integrated data platform. 

Forward-thinking businesses need a partner that shares that vision and can realize it. A trusted partner that treats compliance as a creative limitation – seeing the problem as a possibility. One willing to understand their data challenges and opportunities, and work with them throughout the journey. 

To turn compliance into competitive advantage, then, it is not enough to make one-time investments in custom solutions. It’s about engineering the next generation of financial services; building a tech stack that can both rise to regulatory challenges and deliver lasting value across the business. Finding the partner who can get you there is the first step. 

Keen to know more? Watch the “Turning compliance into competitive advantage” webinar recording here