Financial institutions are struggling to comply with the growing number of rules, regulations, and standards and are investing tremendous resourc- es in the way of money, time, and people toward
attaining compliance. The enormity of these investments
has provided ample opportunity for new entrants into the
regulatory compliance consulting market. Once the traditional stronghold of public accounting firms, the service provider market for regulatory compliance consulting has expanded over the past decade.
Public accounting firms continue to be well-positioned
in this market due to the depth and breadth of their regulatory subject matter expertise obtained through compliance assurance for large and complex organizations
doing business across multiple geographic jurisdictions.
Building on this strength, the Big Four firms, in particular, go beyond just providing technical expertise, by
combining comprehensive risk, tax, and consulting services to help clients design and implement appropriate
operating models and management systems that shape
the compliance organization.
Stricter regulatory enforcement and the resulting
wave of high-profile enforcement actions against large
financial institutions are providing an entry point for
more traditional management consulting firms. Several of the big strategy houses, in particular, offer robust
crisis resolution and program management capabilities
but also lend clients their brand recognition and credibility in appeasing regulators that their remediation
efforts are serious. Remediation projects additionally
position these firms well for follow-on operations excellence and transformation projects that utilize their
traditional strengths in strategy, organizational design,
operations excellence and customer experience.
Transactions and legal-oriented consulting firms with
strong forensics and investigative capabilities are also
organizing to provide high-quality compliance services
at much lower price points than their larger peers. They
not only offer technical expertise but staff augmentation
and technology automation for laborious and data-inten-
sive regulatory-mandated lookback analyses and calen-
dar-dictated risk assessments, program evaluations, and
exam testing through project, co-sourced, and outsourcing
arrangements. GRC technology platform companies also
offer consulting services alongside turn-key compliance
systems and solutions that aggregate, automate and stan-
dardize the production of timely compliance reporting.
There are a number of foundational capabilities re-
quired by consultants seeking to enter this market.
• Subject Matter Expertise. Clients require and expect
deep regulatory expertise to be able to discern and prior-itize the diversity of often vague and contradictory laws,
standards, and regulations by issue, industry and geographical jurisdiction. Technical regulatory knowledge is table
stakes in compliance consulting, but how firms attain this
understanding varies. On one extreme, a few firms have set
up dedicated centers of excellence as repositories for regulatory knowledge, while on the other, firms retain needed
expertise through contract arrangements.
• Operating Model Design. In establishing their
compliance programs, companies look for firms that
can provide market insights, organizational design,
best practices and benchmarking metrics to design and
develop compliance programs appropriate to their size,
complexity and risk appetite.
• Regulatory Change Management. Technical adherence to rules is no longer sufficient in today’s regulatory environment. Organizations must build compliance programs
that not only result in technical compliance with all applicable regulation but also demonstrate to regulators both
an organizational commitment to compliance and program
effectiveness in maintaining compliance. For consultants,
this means deriving metrics that prove to regulators that
client organizations possess a culture of compliance and
can implement new rules to remain compliant.
• Transformation. As institutions realize regulatory
compliance is here to stay they seek to obtain better value
from their compliance investments. They are using the
current relative lull in new regulation to rethink and restructure the compliance function and organization and
to streamline and rationalize duplicative organizational
structures and processes in meeting overlapping requirements of multiple regulatory agencies and stakeholders.
Naima Hoque Essing is a senior analyst, management
consulting research for ALM Intelligence.