Susanne Hofrichter/ October 1, 2018/ Uncategorized

Compliance has become a fact of life in today’s world – and it’s clearly here to stay. This means mounting challenges for companies, continually faced with adopting new measures to prevent violations. Compliance is also becoming part and parcel of corporate governance and risk management. An ominous prospect for some, fearful of a major administrative burden and rising costs. For others – an opportunity – not least for its potential impact on customers. But what influence does compliance really have on your customers? And how does it make itself felt in real terms?

Lost trust – lost customers

If a company’s compliance solution is not fit for the job, the implications can be far-reaching. If bribes or cartel agreements come to light, for example, the penalties are substantial. Companies risk hefty fines and indemnity payments. And permits and subsidies can be revoked. The 2006-2008 corruption scandal at Siemens cost the company around two billion euros – not to mention a significant hit to its reputation. These days it’s far harder to sweep corporate misdemeanors under the carpet. Media coverage is too widespread. Yet still – according to the “Report of the Nations on Occupational Fraud and Abuse” – 47% of companies are not reporting fraud cases for fear of bad publicity and its impact on customers. Trust is everything to today’s consumer and a loss of image is not easily forgiven.

Compliance as competitive advantage

A positive reputation creates confidence. Customers want to be able to trust their banks and know that their food, clothing, and cars come from ‘clean’ supply chains. This new awareness of compliance issues is growing steadily – and represents a significant opportunity. If a company can operate transparently, and clearly show it’s playing by the rules, it sends a powerful message to the outside world. Trust grows, customer loyalty blossoms, and competitive advantage over rivals with less salubrious corporate cultures is a given. The biggest challenge companies face in this respect is building a strong compliance culture and ensuring successful communication. Enterprises with an effective control system suffer fewer losses from fraud. And if the worst does happen, incidents can be resolved more rapidly – all factors that impact favorably on customer loyalty. In essence, customers are moving center stage as the newest external stakeholders in compliance.

Prevention is better than cure – must-haves of a good compliance solution

An effective crisis communications strategy will go a long way towards limiting reputational damages. Far better, however, to head issues off at the pass and eliminate the risk of crisis in the first place. This demands a solid compliance solution that leverages automation and innovative technologies to reduce administrative effort and costs. The solution should systematically create a framework whereby violations are eliminated, or at the very least significantly reduced. Solutions must also be able to recognize, and overcome, existing infringements. The best solutions take advantage of cutting-edge methods such as predictive analytics, machine learning, big data, and blockchain. With these technologies on board, more precise safeguards are possible, and companies benefit from greater adaptability and speed. The most important requirement of any solution will be the capacity to collate large quantities of data in the shortest time possible, as well as supporting real-time payment screening. At the end of the day, if your solution can orchestrate all of this in the background – without restricting or disrupting business – your customers will thank you for it.

There’s no doubt great challenges lie ahead – but also considerable opportunities. Bring it on!


ACFE (2016): Report to the Nations. On occupational fraud and abuse;; Accessed 12 July 2018

Susanne Hofrichter

About Susanne Hofrichter

Susanne Hofrichter is Product Manager at targens GmbH. For over 10 years, she has been responsible for new and continued developments in the area of compliance. Her technical focus is on the topics AML, Fraud and KYC. Innovative topics such as data analytics, blockchain and distributed ledger technology are just as important to her as the fulfillment of regulatory requirements.