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Manual Compliance Processes – Soon a Thing of the Past?

Managing the Deluge of New Regulations

With over 200 new regulatory changes coming down from government financial agencies every day, managing regulatory change is a real challenge, especially for financial service providers that are still relying on manual processes for compliance updates.

Traditionally, compliance updates at financial institutions have been performed by teams of employees. These individuals watch for policy changes and integrate them into a certain tracking system, most commonly in an Excel spreadsheet or similar. This manual process is time-consuming, costly, and fraught with potential for error and inadequate management of aging data. Data is siloed away, isolated from other pieces of information that could provide helpful context.

The traditional data-silo approach to regulatory compliance within the global financial sector is inherently flawed. Data is isolated within files scattered across an organization, but many regulations demand that financial institutions interpret and apply information holistically. This translates to high levels of false alerts and resources wasted on investigations that go nowhere.

Tools for the Modern Regulated Marketplace

According to our recent survey of global financial institutions, approximately one-third responded that their regulatory update processes are too manually-demanding, and one-quarter said that these processes are too time-consuming. In other words, a substantial proportion of the regulated financial marketplace is struggling to find a way to achieve compliance with global regulations that are growing more complex by the day. Fortunately, however, enterprise software providers are developing solutions that are helping financial institutions improve the efficiency of their regulatory updating processes and streamline compliance across the organization.

Manual Compliance Processes

Approximately one-third responded that their regulatory update processes are too manually-demanding

Once a compliance team has an effective mechanism for regulatory change management, the organization can use technology to collect, tag, search, and cross-reference electronic communications like emails, voice mails, app messages, and other digital information together with relevant contextual and trade data. This approach is far superior to the cumbersome process of gathering information manually and collecting it into data silos, as it allows for a cross-pollination of data that vastly improves the quality of compliance-related information.

RegTech Develops to Address the Needs of an Evolving Marketplace

Data silos may have evolved as a natural response to the struggles of maintaining compliance in the global financial sector, but modern regulatory technologies are offering solutions that vastly improve on these manual processes.

Global financial institutions are actively seeking RegTech to solve their compliance challenges. According to the survey of these companies cited above, the vast majority of financial institutions have either already replaced or are investigating the replacement of manual compliance processes with RegTech.  AI-driven platforms that make compliance easier to achieve and reduce the inefficiencies of false alerts are working well for several companies in the financial space already, and if these trends continue manual compliance processes will soon be a thing of the past.

Rather than the inefficient and unreliable manual data silo processes used to track regulatory changes and relying on human researchers to detect, identify, and catalog changes, RegTech allows you to automatically detect and integrate relevant regulatory changes using a sophisticated AI and ML-driven platform. Data from all sources is contextualized and made searchable by AI technology, greatly improving the accuracy and efficiency of compliance investigations based on recent regulatory changes. This allows customers to move from actively monitoring their compliance operations to ensuring effective regulatory oversight, thanks to automated change management, data enrichment, and reporting technologies.

Leveraging Technology to Solve Compliance Problems

When RegTech is deployed effectively, there is no end to its potential. Compliance officers of the future will be working in streamlined environments where regulatory changes are automatically integrated into operational systems and AI-enriched compliance data on a smart platform is able to immediately point to activities or individuals that may be contravening the law. If the powerful Machine Learning behind the sophisticated enterprise software detects a discrepancy based on its smart investigation, it is capable of automatically reporting the incident to the regulator. This completely avoids the problems and pitfalls of manual compliance methods, improves costs, and saves time for global financial institutions.

It’s no secret that banks across Europe are struggling to comply with new regulations like MiFID II, GDPR, MAR, and other international regulations that apply to the financial service industry. Companies that are managing to make the grade are relying on sophisticated RegTech tools designed to make compliance easier and more efficient, despite its increasing complexity.

At its very core, all technology is a tool. Increasingly complicated tasks – such as those required within the average compliance department of a global financial institution – demand increasingly sophisticated technological tools to achieve them.


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