Only 2% of capital markets firms have a fully automated compliance support program, according to an Aite Group and Cordium survey. This high level of dependence on manual processes leaves the industry open to errors, gaps in compliance, a lack of agility in reporting during an audit and ultimately the risk of non-compliance.
The survey explores the evolving needs of capital markets firms in the face of continued regulatory changes. The report assesses the strategic direction and practicalities of compliance, including workflow and resource challenges and how firms prioritise investment in automation.
Doug Morgan, group chief executive, 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.”
Despite risks created by manual processes, trends regarding process management and monitoring are particularly telling. Only 8% of respondents use formal metrics to measure the impact of noncompliance and 43% don’t currently measure it at all.
“Firms that are failing to take a proactive approach to monitoring and managing compliance are taking a big risk,” continued Morgan. “While it’s entirely understandable that compliance professionals can be consumed managing their day-to-day workloads, firms should look to technology to enhance oversight and future-proof their programs.”
Reactive to proactive
Virginie O’Shea, research director, Aite Group, said: “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. 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.”