As part of our ‘State of Compliance’ research project, we collected data from interviews with almost 50 compliance professionals across more than a dozen industries to discover what the future of compliance looks like.
Today’s leaders are already aware of the powerful capabilities of digitisation across departments, from marketing and finance to operations and IT. Time-saving, cost-saving, driving efficiencies, happier staff…the benefits of introducing technology are endless.
And yet, according to our research, compliance teams seem slow to adopt this area of digital transformation. Technology which is designed to make their working lives easier, and provide a better customer experience across the board.
Using regulatory technology
Just 38% are currently using RegTech (regulatory technology), software created to ease the management of client onboarding, regulatory monitoring, reporting, and compliance. Worryingly, 40% use basic office productivity tools such as word processors or spreadsheets to manage their compliance processes.
Regulated institutions of all sizes are becoming more digital in their daily operations, and improving customer experience and boosting efficiency remain high on leaders’ agendas. The logical next step for regulated institutions is to further leverage digitisation for compliance. Through the use of RegTech, compliance teams can deliver process efficiencies, costs, and a more confident and connected compliance strategy.
Of those that do use RegTech, respondents report a number of key benefits. From having a central location to manage compliance and controls, to the effective management of compliance cases, facilitating informed decision-making, and the ease of understanding and visualising trends in compliance performance.
Those that don’t, cite budget as the main prohibitive reason for not investing in RegTech (66%). And yet, when you consider our earlier insight into the proportion of revenue being spent on compliance costs, surely this begs the question: can compliance costs be better allocated?
Insufficient resources and a lack of time are seen as further blockers to considering RegTech, being cited by 16% and 11% respectively.
An ongoing manual process
Naturally, there will always be cases that require further due diligence before you safely commit to onboarding them, continue an ongoing relationship, or not. It is these cases which often result in a higher proportion of manual activity and intervention required. And yet, when 100% of compliance is being managed manually or via spreadsheets, these single, complex cases can consume a significant portion of compliance teams’ time.
This is often where the vast amount of compliance costs stem from and where time is being spent. It is estimated that a staggering 90% of compliance costs sit within just 10% of cases!
The evolution of FinTech necessitates a parallel development of RegTech. Regulatory overlaps and contradictions are not uncommon, and financial institutions have, unsurprisingly, looked to RegTech to optimise their compliance management.
CFA Institute
Using RegTech allows for the automation of comprehensive KYB and KYC checking processes, including identity, document and liveness verification tools, and compliance teams can streamline their onboarding processes with client verification in real-time.
With tech doing most of the heavy lifting, talented compliance professionals can focus on the cases where they can most add value, leaning on their expertise to ensure compliance.
