New York
13 December 2017
Reporter: Becky Butcher

Firms remain open to exposures from manual processes


Only 2 percent of capital markets companies have a fully automated compliance support programme, leaving firms open to risk from manual processes, according to a survey by Aite Group and Cordium.

The survey, Regtech Realities: Moving from Reactive to Proactive Compliance, featured responses from 120 capital markets firms and focused on the evolving needs of capital markets firms in the face of continued regulatory changes.

It also showed that only 4 percent of participants feel they have an entirely strategic approach to regulatory reform.

Just under half, 45 percent, of survey participants said they have increased investment in dedicated vendor technology for compliance, with a focus on cloud-developed systems.

They survey also found that 53 percent of firms have invested in central platforms for compliance documentation tracking, while a further 13 percent are considering the introduction of a similar platform in the next 12 months.

Aite Group and Cordium suggested that the dependence on manual processes leaves the industry open to errors, gaps in compliance, a lack of agility in reporting during an audit, as well as the risk of non-compliance.

However, despite the risks created by manual processes, only 8 percent of respondents use formal metrics to measure the impact of noncompliance, while 43 percent don’t measure it at all.

Doug Morgan, group chief executive of Cordium, said: “As the pace of regulatory change continues to accelerate, technology solutions that help firms collaborate, manage expanding stakeholder networks and cut through operating noise have become essential. Legacy, piecemeal and manual approaches cannot scale to meet today’s challenges.”

“The good news is that technology is increasingly available to transform traditional processes, enabling compliance officers to work across the firm to achieve buy-in and gain new insights. Compliance teams can implement a technology-focused approach to enhance the overall business and establish a strong compliance culture.”

Virginie O’Shea, research director at Aite Group, added: “The industry has been bombarded with a barrage of compliance requirements over the last few years and, as a consequence, must shift from a reactive to a proactive mindset.”

She explained: “Firms need to better understand their compliance issues to ensure lessons are learnt for the future. Next-generation technologies are rapidly developing to support firms, with cloud deployments proving valuable in the context of increasingly data-intensive regulations, and newer areas such as natural language processing maturing fast. The future of compliance will be characterised by skilled professionals supported by technology at every step.”

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