Why Do Banks Find Business Process Compliance So Challenging? An Australian Case Study

TL;DR

This paper investigates why Australian banks struggle with Business Process Compliance, revealing that excessive, complex, and dynamic requirements lead to inefficient processes and proposing a framework and circuit-breaker approach to address these challenges.

Contribution

It introduces a conceptual framework for understanding BPC challenges and proposes a novel circuit-breaker approach as an 'off ramp' to improve compliance processes.

Findings

Banks face excessive compliance loads

Processes are often complex and spaghetti-like

The proposed framework and circuit-breaker approach aim to break the fail-fix cycle

Abstract

Banks play an intrinsic role in any modern economy, recycling capital from savers to borrowers. They are heavily regulated and there have been a significant number of well publicized compliance failings in recent years. This is despite Business Process Compliance (BPC) being both a well researched domain in academia and one where significant progress has been made. This study seeks to determine why Australian banks find BPC so challenging. We interviewed 22 senior managers from a range of functions within the four major Australian banks to identify the key challenges. Not every process in every bank is facing the same issues, but in processes where a bank is particularly challenged to meet its compliance requirements, the same themes emerge. The compliance requirement load they bear is excessive, dynamic and complex. Fulfilling these requirements relies on impenetrable spaghetti processes, and the case for sustainable change remains elusive, locking banks into a fail-fix cycle that increases the underlying complexity. This paper proposes a conceptual framework that identifies and aggregates the challenges, and a circuit-breaker approach as an "off ramp" to the fail-fix cycle.