The US Banking Compliance Index measures the incremental cost burden shouldered by financial institutions as they try to keep up with regulatory changes. Continuity, the compliance change management IT firm, has just released the latest figures.

The index held steady in the first quarter of this year, remaining on par with levels experienced in Q1 2017 and Q1 2018. These consistencies solidify new patterns in a climate of regulatory restraint from US federal regulators. Continuity, however, warns that bankers ought to worry about an alarming new trend: Q1 2019 was the third consecutive quarter in which more than 50% of enforcement actions by number were taken against bank officers and directors individually, as opposed to their financial institutions. Credit union employees on the front line also felt the weight of something that Continuity calls "individual enforcement."  

Pam Perdue, Continuity’s chief regulatory officer, said recently that it could now be said that the quarter’s regulatory activity was typical for the Trump administration, which she heralded as "pro-business.” She went on to say: “Even though regulatory change still consumes considerable human and financial resources, the pace of new regulation has slightly levelled off. Now is the time for institutions to capitalize on this trend and take advantage of this opportunity to approach compliance management intentionally and strategically instead of merely reacting to changes.”

The index quantifies the incremental burden on financial institutions in keeping up with regulatory changes. The typical US$400-million asset community financial institution needed approximately three-quarters of a full-time employee just to keep pace with regulatory changes, not including the resources that it already dedicates to compliance. The incremental cost per institution per quarter was $15,439 and 305 hours were required to comply per institution in that last quarter.

The BCI draws its data from the Consumer Financial Protection Bureau, the Federal Depository Insurance Corporation, the Federal Reserve, the National Credit Union Administration and the Office of the Comptroller of the Currency. It is calculated using the statistically average size of a domestic US financial institution, currently $350 million according to publicly reported data available from the Federal Deposit Insurance Corporation.