Friday, August 14, 2020

Ed Marcheselli of BAI on the ROI of Compliance Training

By MBA Insights Staff
January 14, 2019

Ed Marcheselli

EdMarcheselliEd Marcheselli is managing director of Learning & Development of BAI, Chicago, a nonprofit independent organization.

MBA INSIGHTS: How are mortgage leaders currently approaching compliance training?

ED MARCHESELLI, BAI: Compliance education is a must-have and, because it is often referred to as a burden, many organizations approach it with a "check-the-box" mentality. Because of this, there is a perception held by some mortgage professionals that compliance training is a time-consuming process so they focus on learning just enough to merely pass the course exams.

But BAI is starting to see a cultural shift where more and more organizations are taking advantage of the benefits associated with BAIcompliance training. Since regulatory requirements impact every role in the organization differently, many mortgage companies are shifting to a decentralized model where instead of being the responsibility of the compliance officer only, employees are being trained to truly "own" compliance and understand its role in day-to-day activities.

INSIGHTS: Mortgage leaders often focus on the financial and time cost that compliance places on the organization, with hopes of reducing both. What do those costs currently look like?

MARCHESELLI: Compliance can be expensive, but the cost of non-compliance is much steeper. There are a lot of different ways to calculate the cost of compliance, too. Most estimates that take into account the staffing, policy creation, process changes, technology and training costs put the annual expense for the financial services industry around $270 billion. With staffing for compliance across the industry almost doubling within the past five years, compliance expenses are continuing to increase. Financial institutions typically spend four percent of their total revenue on compliance, but that could rise to 10 percent by 2022 according to a survey by Duff & Phelps (

Additionally, multiple surveys by BAI, Thomas Reuters and Accenture confirm that despite the new administration and the expected regulatory slowdown, compliance budgets collectively are still expected to increase. This might seem counterintuitive, but the industry continues to face an increase in threats, from identity theft to cybercrimes and more. According to a 2018 industry study by Accenture ( the average number of security breaches per company has more than tripled over the past five years, from 40 in 2012 to 125 in 2017, and global lenders have paid more than $321 billion in regulatory fines since the financial crisis.

INSIGHTS: What steps can mortgage leaders take to ensure positive ROI on compliance training?

MARCHESELLI: In order to truly measure the return on investment, leaders need a clear understanding of what the investment is expected to achieve. Mortgage leaders should consider asking themselves, "What are our compliance training goals, and what is the benefit of achieving those goals?"

One of the top concerns is the collective time it takes to complete compliance training. This has led some leaders to shift their training strategy to focus increasingly on the speed of their compliance training, putting the organization at risk of requiring too little training to be effective. No organization wants to assign too little, be non-compliant, put the organization at risk of making mistakes, generate customer complaints, fail a compliance audit, receive regulator fines or have all the bad publicity associated with these issues.

When determining what steps to take to enhance ROI on compliance training, mortgage leaders should focus on three steps:

1. Identify the organization's compliance goals. Do you want to significantly reduce your training time? Do you want to reduce customer complaints and employee mistakes? When it comes to identifying goals, leaders should not be focused on specific, individual regulation changes like TRID, HMDA, BSA/AML or Reg Z. Rather, seek to have plans in place that apply to any regulatory change.

2. Look at the data already available. What is the average time employees spend taking compliance courses? Are there any areas of weakness that can be baiaddressed? What comments do auditors have regarding the organization's compliance standing? Are there process errors or crimes that can be prevented? By looking at and understanding the challenges currently facing the organization, leaders can work to align the compliance goals with addressing these issues. Consider quantifying the value of the findings to understand the monetary value associated with reducing problem areas.

3. Implement new training techniques, such as role-based courses. Targeted courses that focus on the parts of the regulation that an employee in a specific role encounter in his/her daily work will help reduce training time while increasing productivity and minimizing risk. BAI has seen up to a 50 percent reduction in training time in organizations that incorporated role specific training into their compliance programs. Incorporating this approach in their compliance program, leaders will see a significant impact on their ROI.

By having more efficient, effective training, employees can be empowered to make the right decisions, protecting the organization, providing top-of-the line customer service and positively impacting the bottom line.

(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA Insights welcomes your submissions. Inquiries can be sent to Mike Sorohan, editor, at; or Michael Tucker, editorial manager, at

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