Regulatory reporting is the top investment priority for compliance professionals in the UK, while it is surveillance in the US, particularly among banks, according to a new report – The State of Financial Service Compliance – from regtech firm SteelEye.
The split between the two is “unsurprising given the fact that US regulators are clamping down hard on communications rules. Last year’s headline-grabbing $200 million fine for J.P. Morgan by the Securities and Exchange Commission (SEC) demonstrated the importance of adequate monitoring of employee communications”, said the SteelEye announcement.
The survey, which canvassed 170 senior financial services compliance and risk professionals in the UK and US, also found that 44% are planning to invest more in regtech solutions in the next 12 months and a further 41% expect to invest the same amount as the previous 12 months.
The report notes that almost all or 90% of financial services firms reporting increased compliance costs over the past five years, while one in ten said costs have doubled.
As for challenges, nearly half are struggling with data management issues, including overlaying communications and trades to manage market abuse risk.
They also repoted having difficulties in using management information (MI) efficiently to demonstrate risk as well as consolidating and normalising structured and unstructured data.
A fifth say keeping up with regulatory change is their biggest challenge in meeting regulatory obligations.
Opinions were split on dealing with regulators. While 42% said regulators are now more challenging, 48% say they are easier.
This could in part be due to technology making compliance processes more streamlined and straightforward.
However, 75% believe that financial service firms are well equipped to handle more stringent regulatory rules over the next five years.
In regard to AI or machine learning, 31% of firms had fully implemented such compliance solutions, and 100% of those said they saw a marked improvement in the quality of their management information.
“Our first Compliance Health Check Report demesmonstrates the breadth and complexity of challenges facing today’s compliance professionals,” said Matt Smith, CEO of SteelEye.
He adds, “ Keeping abreast with regulatory change, improving data quality and managing risks and controls within the business are just some of the headaches facing compliance teams.”
He is optimistic that these investments will enable compliance teams to improve the efficiency of their compliance programs – thereby reducing their reliance on administrative and repetitive tasks.
“Doing so can enable the compliance function to pivot from reactive investigations and firefighting to a more proactive model for compliance management and risk detection.” he says.
©Markets Media Europe 2022
