Page 29 - Banking Finance December 2022

ARTICLE

Though building such a culture may take time but once a penalties, sanctions, and loss of reputation. Thus, a poor
culture is built up, then it requires regular adherence, and compliance culture may result in heavy costs on the banks
it sustains for a long time. The most important factor in this which are not limited to mere monetary costs.
exercise of building a compliance culture is that the tone of
Resistance to Change: The employees and the management
this compliance culture should be set at the very top and
of an organisation are often too comfortable with the
percolate down the management. If the upper
existing relaxed culture and are not comfortable with
management is serious about the culture, then it sets an
making any major change in the environment. They are not
example for others and creates awareness & accountability
opposed to the idea of compliance but are mainly opposed
within the organisation. If senior officials themselves are not
to the idea of a change that appears unneeded might bring
compliant then how can they expect good compliance from
them out of their comfort zone. They do not have the craze
others in the organisation. Organisations will have to train
to challenge the status quo.
and convince the staff in creating a culture of compliance.
Focus on business: Several organisations focus more on the
This can be understood better by drawing a small parallel
business aspect of things and measure success and prospects
which illustrates the importance of change coming from the
only in terms of business growth and profits. They do not
leadership. When I was in 2nd standard in my school, our
believe that a culture of compliance is necessitated in order
curriculum included a small story regarding cleanliness. The
to earn profits and grow business. Many a time it results in
story is short and simple but sends a powerful message. In
conflicts between the departments (business /operational)
the story, the French President is shown traveling in a car
and compliance departments in the banks.
when all of a sudden, he sees a waste paper in the middle
of the road. He immediately instructs his driver to stop the
Dishonesty: There might be another reason why an
car, then he alights from the car, picks up the paper and
organisation might be resistant to change. This reason is
puts it in a dustbin. This story goes on to show why Paris
dishonesty and a culture of financial malpractices which the
remains one of the cleanest cities in the world and people
organisation or its employees might be engaged in. Nobody
yearn to visit it. The French President displayed those values
wants to give up their financial perks and some might find
which he expected his countrymen to follow when they
it difficult to forgo dishonest money by bringing in a culture
looked up to him. The change was driven from the top,
of compliance.
hence it reached the very bottom.
A strong compliance culture should also be inculcated within
The term ‘culture’ is defined by the online lexicon Merriam the employees and ensured in the bank. The act of creating
Webster as ‘a set of shared attitudes, values, goals, and a healthy work environment that adheres to compliances is
practices that characterizes an institution or organization a long and continuous process and it further involves a very
a corporate culture focused on the bottom line.’ There do active role by the management, especially the upper
not seem to be any negatives in a compliance friendly work echelons of governance. A trickle-down approach needs to
culture which gives rise to the question as to, why are be formed and the entire organisation needs to engage in
organisations still lacking in a culture of compliance? this continuous process which would improve the efficiency
and accuracy of the workplace.
There are several factors which play a role into why
organisations do not engage in creating a compliance It is the responsibility of every section, department, and
culture within themselves. These include: every employee in the bank to ensure accountability to each
other and a culture of compliance. It requires active
Cost: There is a misperception amongst companies and many participation and teamwork to ensure vigilance at each
organisations remain under the impression that creating and stage of vetting. The staff needs to be vigilant and aware
maintaining a compliance-friendly culture will turn out to of the latest practices and procedures which are often
be a costly affair. But the truth cannot be farther from this, updated by the RBI. This message regarding the creation
a culture of compliance has been shown to save of a compliance culture needs to be conveyed to every
organisations from massive financial and reputational risk employee in every bank to minimise risks and protect the
which result from frauds being perpetrated, financial financial system and wealth of the nation.

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