How Does Contingent Staffing Help Banks Meet Regulatory Compliance?

The Importance of Regulatory Compliance and Contingent Staffing in the Banking Industry

The banking industry acts as the pillar of the global economy, playing a vital role in financial intervention and bolstering economic growth. Operating in a highly supervised environment, it becomes essential for banks to strictly adhere to regulatory requirements and maintain the integrity of the financial system. In this sense, meeting regulatory compliance requirements is essential for banks to sustain trust and mitigate risks. An effective strategy that banks can use for this purpose is contingent staffing.

A contingent worker is someone who temporarily complements a company’s existing workforce to meet certain business needs or project goals. Like most other industries, banks and other companies in the financial space are no strangers to employing contingent workforces. This article gives a view of the top challenges that are often faced by banks in attaining regulatory compliance and the role of contingent staffing in addressing those challenges.

Challenges faced in attaining banking regulatory compliance Regulatory compliance in banking indicates the practices and norms adopted by financial institutions to stick to all laws, norms, regulations, and ethical considerations applicable to financial operations. It ensures that all activities and operations of banks remain in alignment with legal requirements and ethical standards.

However, banks encounter a number of compliance challenges triggered by volatile market conditions, complicated financial regulations, cross-border compliance issues, and a scarcity of resources.

Volatile market conditions

The divergent market landscape, coupled with ongoing geopolitical tensions and emerging technological trends, tends to alter the contours of the global economy, creating a major challenge for the banking industry. For instance, rising interest rates, inflation, and fluctuating foreign exchange rates have caused significant disruptions in recent years. With distressed trade markets and low consumer demands, most countries are witnessing a potential slowdown in their economies.

In consideration of these multiple disruptive forces, banks and other companies operating in the financial space often face the need of renovating their foundational architecture concerning interest rates, exchange rates, and other financial policies. For example, recent shifts in monetary policies across regions have compelled banks to adapt quickly to avoid compliance risks.

Complicated financial regulations

The intricate nature of financial regulations often causes compliance teams to struggle while they attempt to understand and analyze them. For instance, the introduction of the Basel III regulatory framework required banks to reevaluate their risk management strategies comprehensively. Besides that, the changing market conditions bring forth frequent alterations in the regulatory frameworks that might be challenging to implement and follow for banks if specialized skills and expertise are not present.

Cross-border compliance issues

Another crucial layer of complexity is added to compliance when banks operate across cross-border jurisdictions. For example, differences in anti-money laundering (AML) regulations across countries can require separate compliance frameworks. The varying international regulatory frameworks and ethical considerations cause the banks to undertake different approaches and strategies for adhering to cross-border regulatory compliance.

Scarcity of resources

Whether it is about responding to sudden market changes or managing cross-border compliance risks, banks need adequate financial resources as well as human capital to undertake a proactive strategy. Despite possessing sufficient financial and human resources, financial institutions often find it challenging to adhere to regulatory compliance due to the absence of skilled and competent professionals in existing teams. During such instances, the deployment of a temporary workforce with desired expertise proves to be advantageous.

Role of contingent staffing in banking regulatory compliance Now that you are aware of the major challenges faced in the banking industry while adhering to regulatory compliance let us delve into the ways in which contingent labor can help deal with those challenges.

Unification with skilled professionals

Banks need professionals who possess an in-depth understanding of financial regulations, ethical standards, and best banking practices to crack and interpret complex regulatory frameworks. For example, contingent professionals experienced in compliance-specific roles can help banks navigate requirements like GDPR (General Data Protection Regulation) or SOX (Sarbanes-Oxley Act). Their existing workforce may lack the compliance-specific skills and knowledge required to drive a change during fluctuating regulatory demands.

By opting for a contingent workforce model, banks can enrich their teams with skilled and talented professionals. Such professionals can assist banks in certifying that their compliance programs remain updated with the latest financial regulations and ethical standards. These strategies align with the essence of regulatory staffing services, ensuring timely compliance.

Resilience and workforce agility

Contingent staffing is the mainstay for banks to remain agile and competitive amidst the changing and emerging financial regulations and compliance requirements. With contingent workers, banks can attain resilience and agility no matter what the market situation brings in.

Moreover, banks can easily scale their contingent workforce up and down based on business needs, which is not possible with full-time employees or permanent hires. Thus, workforce agility enables financial service companies to take on compliance projects and programs efficiently without the load of long-term commitments. This flexibility is particularly beneficial for permanent regulatory staffing requirements in unpredictable markets.

Potential Challenge: Integration of contingent workers into existing teams may require additional onboarding efforts. Banks can mitigate this by implementing structured onboarding programs.

Reduced expenditures

The deployment of a large compliance team with permanent employees can be loss-making as there are overhead expenditures related to full-time employment apart from fixed salaries. In this regard, contingent staffing helps reduce expenditures and long-drawn salaries. Banks need to pay their contingent workers only the amount agreed upon in the contract for the tasks and responsibilities they undertake for a specific period and nothing more than that.

Prompt response to regulatory changes

With a resilient and agile contingent workforce, banks can respond better and faster to frequent regulatory changes. For example, during the introduction of new sanctions compliance rules, contingent workers with prior expertise can immediately step in to ensure compliance. Contingent labor already holds the skills, competencies, and knowledge required to deal with vulnerable regulatory and ethical conditions. This not only equips banks with the necessary expertise for compliance management but also saves costs, as no additional training sessions are needed to educate them. Effective regulatory compliance staffing ensures that banks can tackle changes efficiently and stay ahead of the curve.

Efficient risk management

When banks hire experienced contingent workers, they get in touch with professionals who have worked on compliance projects in the past and are familiar with the associated risks. For example, contingent professionals with AML expertise can identify and mitigate risks related to financial crimes. Such professionals can be effectively utilized by banks to identify and assess compliance risks and develop proactive strategies to pacify them. Hence, a contingent workforce model can make the regulatory frameworks and financial policies of banks stronger and more secure.

Potential Limitation: Short-term engagements of contingent workers might lack the continuity needed for long-term projects. This can be addressed by maintaining a pool of contingent workers who are familiar with the bank’s operations.

How can Denken Solutions help banks with flexible staffing solutions? At Denken Solutions, we make use of extensive methods and strategies to identify and attract the ideal talent for the banking industry. Our wide range of social channels and recommendations help us find potential candidates who might assist financial service providers to thrive amidst the vulnerabilities of the financial market and global economic downturns.

By joining Denken Solutions, financial service companies can save substantial time and costs. We can assist you in closing vacant positions with ease and efficiency while undertaking the entire hiring process, which includes sourcing, screening, onboarding, and training. We also manage salaries, benefits, and other administrative tasks related to contingent workers, enabling banks to focus on core business operations.

Conclusion 

Thus, contingent staffing brings forth a wide range of benefits for banks and other companies working in the financial space, especially when it comes to regulatory compliance. Banks witness the major challenges of adhering to regulatory requirements and ethical standards due to volatile market conditions, complicated financial regulations, cross-border compliance issues, and the absence of skilled resources. By integrating skilled contingent professionals, financial institutions can efficiently address these challenges, ensuring compliance programs remain robust and up-to-date. Additionally, banks can mitigate potential drawbacks of contingent staffing by employing structured onboarding processes and maintaining a pool of trusted contingent workers to ensure operational continuity.

For a deeper understanding of contingent staffing benefits, explore our enhancing agility in the banking sector with contingent staffing solutions blog post.