Standardising processes biggest challenge in banks

The challenges facing banks in Sri Lanka are internal and organisational in nature.

According to a survey themed Changing mindsets a survey on Compliance and risk management readiness done by i-flex solutions the banks are at the early preparatory stages of improving their risk and compliance framework by rationalising decision-making, operational and administrative processes across different business units and applying rules and policies.

As the banks are in the midst of reviewing the resources, skills technology and investment are required for the next steps.

Twenty-two per cent of the respondents said that standardising processes is the biggest challenge when implementing risk and compliance within the bank.

The other two important challenges confronting the banks are the need for available skilled staff and the need to overcome perceptions concerning the cost of implementation.

Among the challenges rated most important data related issues emerged ahead of the need for clear guidelines from regulatory bodies for banks in Sri Lanka in risk and compliance implementation.

The respondents’ concerns over data related issues are influenced by two reasons which include the Sri Lankan regulatory authority indicating it only requires banks to comply with minimum risk management requirements for Basel 11.

Although the Central Bank has expressed the need for banks to take a graduated road map approach to more advanced risk management approaches it has not set any specific requirement and time line.

In addition given that the banks are now at the early stages of establishing the right internal processes, staff and budget to meet compliance and risk management implementation needs data availability and validation. It will pose bigger challenges to the banks as the implementation process continues.

Saloni Ramakrishna, Principal Architect for Risk and Compliance Solutions, Asia Pacific and Japan, i-flex solutions and also the lead for the survey said.

“The need to build internationally aligned risk and compliance frameworks and the need to address the critical issue of Basel norms on one side and combating the twin menace of Money Laundering and terrorism financing on the other is a priority for a systematic and integrated approach to Risk and Compliance initiatives for Sri Lankan banks.

This thinking is in line with the global trend of convergence and integration in the Risk and Compliance space”. “An interesting fact from the survey findings is that “clear guidelines from regulators” do not figure in the top three concerns which is refreshingly different from the findings in some other parts of Asia. This clearly goes to the credit of the Central Bank of Sri Lanka,” she added.

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