Need a fully automated, integrated solution but don't know where to begin? Start hereSo you've determined you need a fully automated compliance platform. Maybe you read our recent blog on the topic and it struck a chord. Or maybe whatever benefit you perceived in sticking with an all manual or mixed compliance system no longer exists or is no longer worth the trouble, and the changeover to a fully automated, fully integrated system shouldn't or can't be put off any longer.
Whatever the proximate cause, you could probably use some guidance in determining whether to build a compliance platform or buy one. It's no secret StarCompliance builds them, but buying from a vendor isn't necessarily the right option for everyone. With that in mind, we've dedicated this week's blog space to an objective look at the pros and cons of building and buying.
There's no place like home
Let's start with an analogy. The home ownership-versus-renting analogy holds up well when it comes to compliance platforms. The arguments typically go something like this: Home ownership means you have final say-so on any proposed projects and the ordering of to-do lists. You can personalize your surroundings anyway you see fit, so long as it fits your budget. You have complete control over what gets done and how it gets done, as well as the worry that goes along with it.
Renting means not worrying about much of anything at all, except cutting that monthly rent check. If anything breaks or needs updating it's someone else's problem. As a renter, you're largely absolved of responsibility, but you may also lack authority to personalize your surroundings. What you get or don't get is largely spelled out in the lease.
Back to compliance platforms, when you build one you own it: from product launch to product sunset. You set the pace and priorities of platform development and retain ultimate flexibility for new features as technology, markets, and regulations change. You end up owning a wealth of tech and regulatory knowledge along with a development team that knows the platform like the back of their hands. Your reward for being completely on the hook is a unique solution that answers all your compliance needs.
But with ownership comes costs, like those for software licenses and servers, racks, and routers. Ownership means user training, and maintaining a stable of project managers and developers to support the platform. Ownership means keeping an eye on the budget: knowing your costs up front and down the road, and knowing how much wiggle room you have as requirements change, which they inevitably will.
Ownership also means owning the process. Determining who the decision makers in your organization are and getting buy-in. Making sure your firm stays engaged throughout the software development lifecycle. Ownership means making good friends of the IT team, not only for requirements and timeline estimates but also for systems integration and support. It means keeping peers, subordinates, and upper management mission-focused, and ensuring the platform will do everything it needs to do to keep the business operating with integrity. In the end, ownership means total control but also total responsibility.
The cost of freedom
Back to our analogy, renting a house or apartment is like buying a compliance platform from a vendor, in that you're not really buying anything. Compliance vendors charge a subscription fee and you use their software for as long as you pay the fee. This is known as software-as-a-service, or SaaS. And like with any other product you lease or rent, there's an agreement. And there may be different levels of service, with different options available at different price points. So while buying a compliance platform from a vendor does absolve you of certain kinds of responsibility that come with building, you have to vett each vendor well and know exactly what you're getting. The cost of freedom from ownership is vigilance.
Whatever agreement you sign, read it well. The terms you agree to will determine the shape and form your compliance solution will take. Get a demo and ask for references. Talk to industry peers to find out what they use. Have the vendor provide a software roadmap. Find out when the last upgrade, new feature, or enhancement was. Make sure the vendor meets all security requirements. And because regulators can get very picky about how they want data stored, determine exactly how the vendor backs up records and how easily they can be produced. Finally, make sure your agreement includes access to training and product support throughout the life of your business relationship.
In return for holding your compliance vendor to such strict account you get the power of the crowd: the combined input of dozens of companies and hundreds of compliance officers gathered over years of building and migrating compliance platforms. That combined input translates to platform features and capabilities a lone organization might fail to identify. Buying from a vendor also means you get the power of competition. That is, if the vendor isn't making the best possible product, and keeping its clients operating safely, it won't be in business very long. The vendor-client relationship applies perfect pressure to keep the product moving in the right direction.
Buying from a vendor means predictable costs, economies of scale, and a fast-turnaround. It means a platform easily understood by auditors, because they've probably seen and worked with the same compliance product before, auditing other firms. And with the vendor taking on all responsibility for requirements gathering, development, and product support, buying means you're freed from doing software development as a sideline and can focus on what your enterprise financial institution does best.
Take the next step
If you're reading this, you likely already know you need to make a change in your compliance program. But it's worth taking a moment to make totally clear what a fully automated, fully integrated compliance platform means at the day-to-day level for a company operating in today's complex regulatory environment.
For all the noise about automation replacing people's jobs, that's not what a system like Star's does, or what a similar system built in-house would do. An automated, integrated compliance platform makes the compliance team faster and more efficient at their job, which is to reduce overall firm risk. When it comes to surveillance or an investigation, a well-built platform provides the pieces that team members use to solve the puzzle. In other words, the human factor remains central to the compliance process. Full automation and integration of all your existing systems really comes down to allowing your team to focus on the higher value compliance activities that keep your firm operating honestly.
Whether you build or buy, bringing a compliance system online is a big task. Don't take the process lightly. It's no exaggeration to say the existence of your firm may depend on the outcome. This blog offered a quick overview of the build-versus-buy process. For a more in-depth look, one that takes you step-by-step through a decision-making process that will lead you to the best option for your enterprise financial firm, download our full Build vs. Buy Guide now.