As financial institutions increasingly embrace digital transformation and AI-powered compliance solutions, one critical gap often holds back long-term success: the absence of a clearly defined Target Operating Model (ToM).
According to Corlytics, while innovative technologies promise to revolutionise regulatory compliance, their impact can fall short if not underpinned by a robust operational foundation. Without a well-established ToM, compliance projects risk inefficiency, inconsistency, and even failure.
A ToM is far more than a process diagram or short-term initiative. It represents a strategic vision for how an organisation’s compliance function should operate in its ideal future state, across key areas such as people, process, technology, governance, and data. By defining this blueprint, institutions can ensure alignment and integration across every element of the compliance lifecycle. The goal is to shift from reactive risk management to proactive, scalable compliance operations.
Historically, regulatory compliance functions have grown organically within silos—by geography, business unit, or legal entity. This fragmented approach has led to duplicated efforts, conflicting interpretations of regulations, inconsistent reporting, and a disconnect between the three lines of defence. Global firms often struggle to coordinate responses across EMEA, APAC, and the Americas, each interpreting new regulations differently. Without a unified model, institutions risk inefficiencies, audit gaps, and increased regulatory scrutiny.
A clearly defined ToM changes that. It offers a consistent enterprise-wide framework for how compliance should function across an organisation. This includes standardised workflows, aligned governance practices, integrated tools, and clearly assigned responsibilities. A strong ToM not only supports agile and responsive compliance but also ensures auditability and transparency across the board.
The most effective ToMs are built on five interconnected pillars. First, a well-structured people and organisation layer, where roles are clearly defined across the three lines of defence and jurisdictions. Second, end-to-end processes that guide all aspects of regulatory compliance from horizon scanning to reporting. Third, integrated technology platforms that support automation, audit trails, and regulatory intelligence. Fourth, a solid data architecture to ensure consistent, accurate, and actionable insights. Lastly, strong governance to oversee compliance alignment with business strategy and regulatory obligations.
With these elements in place, a ToM creates the foundation for resilient compliance functions that can withstand ongoing regulatory shifts. As the compliance landscape evolves, this model empowers institutions to remain both responsive and consistent in their approach.
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