Podcasts Other Barefoot Innovation Podcast The ABA's Regulatory Compliance Conference (Part 1)

The ABA's Regulatory Compliance Conference (Part 1)

Published: Sept. 6, 2017, 7:48 p.m.

b' From the main stage

From the main stage

This is a very special show because we recorded it directly from the bustling floor of the American Bankers Association\\u2019s 2017 Regulatory Compliance Conference.

The RCC has long been the preeminent gathering of compliance professionals in the United States and, not surprisingly, it\\u2019s growing -- with another attendance record this year at 1800 people. That makes it one of the largest events of the US banking industry.

We gathered in Orlando this summer to grapple with the huge array of challenges facing compliance professionals, from bank compliance officers and attorneys, to industry vendors, to the regulators themselves.

The episode departs from our usual format. Instead of having one in-depth discussion with one guest, I had eight short conversations with a diverse group of compliance leaders. Each discussion is about twenty minutes. My guests, in order, are:

Part 1

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Gene Ludwig\\xa0-\\xa0Watson Financial and Promontory Financial Group

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Alistair Rennie\\xa0-\\xa0Watson Financial

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Kristi Grant Hart\\xa0-\\xa0Spark Compliance\\xa0Consulting

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Andy Sandler\\xa0-\\xa0BuckleySandler, Treliant Risk Advisors, and Asurity Technologies

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Richard Harvey\\xa0-\\xa0Colonial Savings

Part 2

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Elizabeth Snyder\\xa0-\\xa0Plante Moran

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Brian Levy\\xa0-\\xa0Katten & Temple

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Rajeswari Sathappan\\xa0-\\xa0The Mercadien Group

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Daniel Stipano\\xa0-\\xa0Buckley Sandler

The episode kicks off with a lively discussion with Eugene Ludwig and Allstair Renee. As many listeners know, Gene was previously the Comptroller of the Currency and then founded Promontory Financial. Last year, he surprised the financial world by selling Promontory to IBM Watson, to form Watson Financial. At the conference, I also moderated a fireside chat with Gene and Allistair Rennie. \\xa0It was the RCC\\u2019s first-ever session on regtech. -- and I predict it won\\u2019t be the last.

On stage for our fireside chat, Gene Ludwig presented Alistair and me with...wait for it...Mickey Mouse ears (again, we were in Orlando). For better or worse, everyone in the room got the joke. People in finance have long complained about \\u201cMickey Mouse\\u201d regulations that impose massive, hyper-technical requirements but produce only limited benefits. Gene\\u2019s gift signaled that technology is attacking that problem. We\\u2019re shifting from an analog-era regulatory approach to a digital-era one that will use data and machine learning to make compliance effective and efficient, through regtech. Watson Financial is part of a fast-growing regtech industry that is completely rethinking how compliance is done. Compliance isn\\u2019t Mickey Mouse anymore.

To the contrary, in fact, there was a theme at this year\\u2019s conference about compliance officers as heroes. I\\u2019ve talked in past podcasts about this idea of \\u201cheroic compliance\\u201d -- that compliance people will increasingly be leaders in shaping the future of the industry. That\\u2019s counterintuitive, since compliance has traditionally been seen as a side issue in banking. Today, however, as technology transforms both finance financial regulation, we will see compliance executives at the front, shaping how the industry moves forward. They will be gatekeepers on what innovation can and cannot take hold, blocking harmful change but also opening the doors of the banking industry fortress to allow in new, better, more affordable products, and delivery channels, that can serve more people, profitably and at scale, in ways that actively foster consumer financial health. I think we should all begin to use the hashtag, #HeroicCompliance. \\xa0

In the fireside chat, Alistair took this idea further, arguing that compliance officers may actually be the people who keep the banking industry competitive in a high-tech world. Why? As they adopt regtech, they\\u2019ll be at the forefront of innovating in how banks use data and AI -- and therefore leading the charge to break banks\\u2019 data out of it legacy silos and putting it to use -- first to transform compliance, and later, who knows? ...maybe to transform banking, itself.

The conversations in this episode vary widely. We talked about regtech; the regulatory burden on community banks (including how regtech can help); how banking is changing; how compliance is changing; how regulators should balance use of rulemaking, supervision and enforcement; the grounding of compliance in mission and ethics; and the psychology of compliance, including that people sometimes look the other way on ethical failures in order to get along. We also discussed some of the top issues of the day, like AML and TRID. My guests have a mix of experience as regulators, lawyers, compliance officers, auditors, and compliance leaders, working with a wide range of large and small institutions. They have a wealth of insight into where we\\u2019ve been, where we are today, and where we should be going.

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Meanwhile, I\\u2019ll hope to see you at the events where I\\u2019ll be speaking this fall:

Meanwhile, keep innovating!

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