Once viewed as a straitjacket by many financial services firms, the compliance department is undergoing a metamorphosis galvanised by customers and amplified by technology.
Driven by regulation and increasingly savvy customers, the most successful financial services firms have realised that understanding their customers’ needs lies at the heart of profit and growth. Compliance, once criticised as an innovation inhibitor, is now gaining recognition as a function rich in customer data.
New RegTech innovations are enabling teams to capitalise on this to improve processes, cut costs and gain unique customer insights. As a result, a marked shift is occurring, unfettering compliance from being a profit sponge to a value creator.
A new era for compliance
Regulation has come on a long way from the tick-box, lip-service regime adopted before the 2008 financial crisis. Demonstrating and evidencing that customers have received a good experience and outcomes has become central to organisations’ compliance operations.
This change in mindset has been carried by a wave of new technological innovations which have supported compliance teams whilst raising expectations from customers, stakeholders and regulators. This is a growing international trend, with UK and Australian financial services watchdogs (FCA & ASIC) conveying a similar message that as new tools become available to aid compliance, they will increasingly be asking firms why they aren’t taking advantage of them. Benchmarks are shifting.
Compliance costs, although a necessary expense, have reached dizzying heights for many firms in recent years as a result of these growing demands. With RegTech solutions expected to rise around 30% by 2022 and account for 34% of compliance spend, technology is being viewed by savvy compliance departments as a key way of balancing the cost-to-income ratio.