Proposing a compliance training success framework for South African banks to enhance an entrepreneurial business environment

Abstract

“Intellectual growth should commence at birth and cease only at death.” - Albert Einstein Compliance departments are crucial to maintaining a competitive advantage among South African banks. Compliance departments are perceived to have high costs, compounded by sanctions and the difficulty of proving the value of compliance training. There is a need for banks to be entrepreneurial. Research proves that an increase in corporate entrepreneurship and entrepreneurial orientation increases performance, and that entrepreneurial orientation is a component of corporate entrepreneurship. This study examines the relationship between corporate entrepreneurship and compliance training success with entrepreneurial orientation as a mediating variable. Compliance Officers within the South African banking sector were targeted through purposive sampling. Skills Development Facilitators and compliance contacts within each South African bank were used as an entry point. There was a total of 1 232 possible participants in the study, with 341 surveys returned which represents 27.7% of the participant population. Structural equation modelling was used in the empirical study. All ten compliance training success models were positively correlated with corporate entrepreneurship, thus proving that an increase in corporate entrepreneurship increases compliance training success. Entrepreneurial orientation positively mediated the relationship between corporate entrepreneurship and the Kirkpatrick training success model. The biographic variable, age, measured a negative relationship with five compliance training success models. Seniority within the organisation measured a negative relationship with the return on investment compliance training success model. According to the descriptive statistics, most respondents agreed or strongly agreed with the statements measuring corporate entrepreneurship and entrepreneurial orientation and furthermore, that compliance training success was evaluated within the compliance departments of South African banks, except for return on investment. Conclusions and recommendations were made to various stakeholders, such as managers and leaders of compliance departments, South African banks, the People and Culture industry, and regulators of banks, to enhance corporate entrepreneurship and ii entrepreneurial orientation within compliance departments of the South African banking sector. Recommendations include considering processes to create the right environment and structures that support and encourage entrepreneurship within the constraints of the regulatory landscape and mandate of compliance. Acceptable entrepreneurial behaviours should be recognised, encouraged and incorporated into performance management contracts. The implementation of RegTech can free up time for innovation, and compliance leaders should become experts in the innovation process, advising their banks on managing compliance risks associated with FinTech solutions. Theoretical contributions include supplementing the theoretical knowledge on corporate entrepreneurship, entrepreneurial orientation, and compliance training success. Practical contributions include the training success framework proposed for South African banks to enhance an entrepreneurial business environment, supplemented by the quality assurance framework with suggestions on how to evaluate compliance training success, as well as the action plans for various stakeholders to increase entrepreneurship within compliance departments of South African banks. There were limitations, primarily related to the sampling unit. Constant clarification and collaboration were required so that Compliance Officers within the banking sector and employees responsible for designing compliance training completed the survey. Several recommendations were made for future research, such as a longitudinal study within compliance departments and the banking sector, especially with Regulatory Technology (RegTech) and Financial Technology (FinTech) maturing. The compliance training success framework comprises the overarching training ecosystem and the sequential instructional design process (ADDIE: Analyse, Design, Develop, Implement and Evaluate), which builds the compliance training success factors into the process. An ecosystem of practical training includes the entrepreneurial environment, the communication program, the learning environment that supports the learning process, leadership that reinforces learning and concrete learning processes.