Financial institutions operating in the U.S. must comply with a myriad of requirements that have only grown in complexity in recent years. Regulation has been introduced with the objective of advancing important public policy goals such as the safety, stability and efficiency of the financial system; yet their combined effect has placed a substantial burden on financial institutions and left them with considerable challenges. How are financial institutions approaching their compliance obligations, and what opportunities are open to them to manage compliance more effectively at lower cost?

In our new point of view, "Navigating the Compliance Labyrinth: The Challenge for Banks," produced by the Deloitte Center for Banking Solutions, we conducted a survey with chief compliance officers, chief risk officers and other senior executives at 20 of the top 50 banks and thrift institutions.

Some of the key findings of the survey include:

• Compliance costs grew significantly faster than net income for the financial institutions in our survey. While compliance spending as a percentage of net income for the financial institutions surveyed was 2.83% in 2002, by 2006 it had grown to 3.69%. The indirect costs of compliance management are much greater, but more difficult to precisely measure.
• As costs have risen, financial institutions appear to have responded more by applying people to monitor compliance rather than focusing on process improvement and technology to manage it.
• Ninety-five percent of the financial institutions surveyed said their executives were much more involved in compliance management than in the past, with 40% saying that the time devoted to compliance had increased by more than 25%.

Learn more in the report attached below.