Why Contract Management Is Key For EBA Regulations

The European Banking Authority’s (EBA) regulations have a significant impact on how companies use contract lifecycle management (CLM) and run their contract management operations. Established in response to the financial crisis of the late 2000s, the aim of the EBA regulations is to improve the stability and resilience of the banking industry, protect consumers and investors, and ensure that the industry operates in a transparent and accountable manner.

One of the key areas covered by the EBA regulations is contract management. Banks and other financial institutions rely on contracts to manage relationships with customers, vendors, and third parties. Effective contract management is crucial to ensure that they comply with regulatory requirements, manage risk effectively, and maintain transparency in their operations.

The EBA regulations require companies to have robust systems and processes in place for managing contracts. The regulations mandate that companies have clear policies and procedures for identifying and managing conflicts of interest. This requires companies to have a comprehensive understanding of their contractual obligations, and to ensure that all stakeholders are aware of the terms and requirements of the contract. By doing so, companies will be better able to manage any potential conflicts of interest that may arise.

Additionally, the EBA regulations require companies to have strategies in place for managing and mitigating risks associated with contracts. Companies must ensure that their contract management systems are secure, reliable, and capable of providing accurate and up-to-date information on contract performance, risks, and obligations.

The EBA regulations also require companies to establish clear lines of responsibility and accountability for contract management. This means that senior management must be aware of the risks associated with contracts and be responsible for ensuring that appropriate systems and processes are in place to manage these risks. Contract management must be viewed as a strategic function within the company, with clear goals and objectives that are closely aligned with the company’s broader strategic goals.

Companies that fail to comply with these regulations may face financial penalties, legal liabilities, and reputational damage. Therefore, it is essential that companies in the banking and financial sectors invest in CLM software and contract management processes to ensure compliance with these regulations and manage their contracts effectively.

A significant number of financial institutions including several regulators have adopted CATS CM® as their process standard.

Arjen van Berkum

Arjen van Berkum is a columnist, keynote speaker and motivator, with an eye for business ecosystems, innovation and disruption. In addition to his work as technology and contract management evangelist, he is a visiting lecturer at Delft University of Technology (TU Delft).