KQ Article

The Deluxe Knowledge Exchange 2010 Collaborative kicked off in September. We were eager to get started, and we wasted no time in steeping ourselves in our topic for the year — How can banks and credit unions thrive in the increasingly regulated climate of banking?

We began our work with these two research objectives:

1. Explore the history of banking regulation to glean insights from historical precedent.

As we studied this industry’s regulatory history, a clear pattern emerged: every major regulatory decision was preceded by an equally major financial calamity. The Glass-Steagall Act, FDIC and SEC all came from the Great Depression. The S&L mortgage crisis led to the RTC. And our most recent situation, the Great Recession, has brought us Reg-E, Reg-Z and Dodd-Frank, so far.

2. Examine other industries that have found a way to innovate within regulated environments.

It’s easy to feel like financial services is the only industry ever to be burdened by layers of regulation. In truth, all industries have some federal regulation, varying in scope from minimal government involvement to direct government oversight. Think of the FAA for the airline industry, or the FDA for pharmaceuticals.

Good news. We discovered that even heavily regulated industries continue to innovate, differentiate and grow. In healthcare, for instance, hospitals are merging and creating partnerships to facilitate change. New programs have been developed to reward billing fraud exposure. Providers are promoting “medical tourism,” enticing patients to travel great distances for specialized, expert care. These are just three of countless examples.

While few of us welcome regulation, it forces us to think differently and change existing processes. In fact, such constraint often helps industries shape their futures for the better.

Right now, we have a real opportunity to differentiate in this environment. It’s not enough to merely comply with regulations. Your regulatory strategy must also align with the needs of your customers and the brand promise you make to them.

As regulations continue to create a new norm within our industry, we will seek to understand what’s required for banks and credit unions to not merely survive, but to thrive. Stay updated on progress at:

• The Collaborative Blog
• Deluxe on Facebook
• Deluxe on Twitter: #DlxCollab