Expected Growth in Regulatory Technology Investment

There is an expected rise in regulatory technology (regtech) investment over the next 12 months, leaving firms that still deploy manual compliance support systems open to different levels of risk.

A recent survey conducted by Aite Group and Cordium showed that only 2% of capital markets companies have implemented a fully automated compliance support system, while the other players are still using manual compliance support systems, thus leaving the entire capital market susceptible to gaps in compliance, large margins of errors, lack of swift reporting during an audit and ultimately the risk of non-compliance. The survey goes further to examine the effect of continued regulatory changes on capital market firms, examining the strategic direction and feasibility of compliance, with respect to workflow and allocation of scarce resources, and the resultant effect on investment prioritizing in automation.

The group chief executive of Cordium, Dough Morgan summarize the report in his statement, he said that as the pace of regulatory change continues to gather momentum, technology solutions that assist firms to collaborate, manage the ever-increasing stakeholder networks and cut through operating noise have become increasingly essential to the survival of firms. Hence, mere legacy, piecemeal and manual approaches are not sufficient enough to solve today’s daunting challenges.

The good news he stated is that technology is increasingly ever readily available to change traditional structures and processes, enabling compliance officers to work across the firm to achieve results and gain new insights. Compliance teams can, therefore, deploy a tech-centered approach to improve the entire business structure and achieve a stronger compliance culture. He summarized his thoughts by saying that firms that are not monitoring, controlling and managing compliance proactively, stand a big risk. Firms should, therefore, deploy technological solutions to improve oversight and future-proof their programs instead of relying on their compliance professionals to engage in daily workloads.

Shifting from Reactive to Proactive Mindset
The capital market sector has been burdened by a barrage of compliance requirements over recent times, Virginie O’Shea, the research director for Aite Group stated. He then concluded by saying that firms must shift from having the reactive mindset to having the proactive mindset as a result of these happenings. Firms need to understand their compliance issues better, so as to be able to carry the lessons learned into the future. This is important as next-generation technologies are rapidly developing to support firms, with cloud solutions proving to be entirely valuable due to ever-increasing data-intensive regulations, and other more recent areas which include natural language processing, which is developing fast. He concluded by saying that skilled professionals will support the deployment of technology at every step, this is the future of regulatory compliance.