Key Takeaways FROM TOP US BANK HOLDING COMPANIES
- Tenure: In 2020, average CCO tenure was 6 years.
- Education: 35% of CCOs hold a JD.
- Previous Position: 59% of CCOs’ previous position was in a compliance role, an increase from 53% in 2019, 50% in 2018 and 50% in 2017.
- Internal v. External: 41% of CCOs were hired into the role externally, which is very similar to 2019, 2018 and 2017.
- External Diversity: 45% of CCOs who came into their role externally are diverse.
- Diversity: In 2020, female diversity among CCOs was 43% and overall diversity among CCOs was 53%. Both gender and overall diversity have been trending upward over the last four years (see graphs below).
- Overall Experience: 55% of CCOs’ overall experience is compliance, an increase from 47% in 2019, 40% in 2018 and 38% in 2017.
NEW CCOs HIRED IN 2020
NOTABLE COMPARISONS BETWEEN >$250B VS. <$250B U.S. BANKS
- Among the bigger banks, 69% of CCOs report to the Chief Risk Officer, 25% report to the Chief Executive Officer, and 6% report to the General Counsel.
- Over half of CCOs at both smaller and bigger banks have overall experience in compliance (55% at smaller, 56% at bigger).
- However, smaller banks more open to hiring risk backgrounds as compared to bigger banks, which did not hire any CCOs with risk backgrounds.
- Overall diversity among CCOs is higher at the smaller banks (58%) as compared to the bigger banks (44%).
- Bigger banks have fewer females that came into the role externally as compared to the smaller banks.
KEY TAKEAWAYS FROM LARGEST FOREIGN BANKS IN U.S.
- Tenure: The average tenure of CCOs at the largest foreign banks is 3.8 years.
- Diversity: In 2020, 29% of CCOs at the largest foreign banks are female and overall diversity among CCOs is 38%. Both of these findings are similar to 2019.
- Internal v. External: 67% of CCOs at the largest foreign banks were hired into the role externally.
- External Diversity: 38% of CCOs who came into the role externally are diverse.
- Overall Experience: 71% of CCOs’ overall experience is compliance, compared to 63% in 2019 and 2018. This is a higher percentage compared to CCOs at the top US bank HCs (55% in 2020).
- Previous Position: 79% of CCOs’ previous position was in a compliance role, compared to 71% in 2019 and 2018. This is a higher percentage compared to CCOs at the top US bank HCs (59% in 2020).
Of the newly hired Chief Compliance Officers in 2020, the large majority (78%) have previous compliance experience, which is actually a great sign of the continued maturity of the function. In many cases for banks over the last decade, the CCO role became one which needed the right leadership individual to drive change and transformation considering the impact and influence needed organizationally. This created a ceiling for individuals which developed a “compliance career” through the ranks.
Current and future Chief Compliance Officers have responsibilities which have become more challenging, broader and more diversified. The challenges of budget, automation, accountability, delineation of tactical responsibilities, combined efforts with non-financial risk stripes, ownership and sophistication of technologies and the migration to cloud are just some of the matters which fall on their plate. On top of it all, the perspective and regulatory approach change from administration to administration adds an additional layer of complexity. The CCO role is certainly not an easy one in the industry, and those who sign up for it hold a critical role to the firm’s integrity, protection and reputational impact internally and externally.
Looking forward, the profile of the Chief Compliance Officer will likely evolve further to keep pace with the rapid advances in automation, machine learning/AI and advance technology standardization. Tomorrow’s CCO will need to be increasingly aware of and engage with technology and other functions like cybersecurity and data management to understand and get out in front of the risks of the future.