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Protiviti, Eventus, ClauseMatch and Hummingbird Discuss the Role of Compliance Over the Next Decade

The regtech space is in for a major shake-up, with the FCA‘s new Consumer Duty regulations coming into effect in two months. This presents an opportunity for financial institutions to adopt a new approach to compliance and regulation.

Innovation being catapulted forward by the pandemic and the recent evolution of artificial intelligence has meant that the future of regulation and compliance will certainly look very different to how it does now. To better understand how the role of compliance may change over the next decade, we got in touch with some industry experts.

‘Weave technology and compliance into the ethics of the business’

Bernadine Reese, managing director of risk and compliance at business consulting firm Protiviti, explains how new technology will have a significant role to play in the future of compliance:

Bernadine Reese, managing director of risk and compliance at Protiviti
Bernadine Reese, managing director of risk and compliance at Protiviti

“Financial services firms face a growing set of risks: conversations about environmental, social and governance (ESG) have been developing around the world alongside increasing scrutiny on vulnerable customers, cyber security, cryptocurrency, cloud, artificial intelligence and operational resilience. These areas of focus add to a myriad of other risks faced by the industry.

“This means the compliance mandate is expanding rapidly, as regulators add to the agenda, and risk teams ask for more support to meet these challenges. The modern chief compliance officer (CCO) and their colleagues will need much broader skills to tackle the task ahead.

“We believe the future of compliance will be based on a combination of new skills and technology. CCOs and their teams will automate many of their existing processes, enabling them to spend time interpreting data, communicating stories and trends, and advising their executive teams on compliance strategies. Through transformation programmes, they will develop new leadership skills and get to grips with new areas of regulatory focus.

“But ultimately, the goal of the modern compliance team will be this: to weave technology and compliance into the ethics of the business, and develop a dynamic approach that helps strategically navigate a changing world.”

‘Compliance teams will continue to diversify their skill sets’
global head of regulatory affairs at Eventus
global head of regulatory affairs at Eventus

Joe Schifano is the global head of regulatory affairs at Eventus, the trade surveillance, market risk and transaction monitoring solution provider. He explains his view on what compliance teams will do over the next decade.

“Management and integration of data will be key going forward. Compliance teams will continue to diversify their skill sets with both regulatory and technical expertise. Surveillance teams will continue the push to do more with less, employing newer technology to get to their risk quicker.

“Yet, standard compliance practices will always be needed. Experience counts. This includes doing periodic risk assessments, having clear written supervisory procedures, and adjusting your alerts when the environment changes. Selecting flexible technology will be essential to free up talented compliance staff to focus on the most high-value tasks.”

Expecting ‘stricter reporting requirements’

Danny Gal, chief operations officer and chief revenue officer at regtech Clausematch, also explains how change in approach from the regulators may see a change for compliance teams:

Danny Gal, chief operations officer and chief revenue officer at Clausematch
Danny Gal, chief operations officer and chief revenue officer at Clausematch

“In the next few years, I predict we will see developments around consolidation and integrated GRC or regtechs in regulated businesses. Through advanced technologies and API adoption, we will see a shift from standalone solutions to more integrated systems talking to one another. We will also see more teams working together: regulatory teams, compliance teams, and risk teams all moving toward the same goals. No longer will a siloed approach to compliance suffice; cohesion is essential.

“It’s also important not to overlook the progress regulators themselves are making in this space. They are becoming more sophisticated, and more technologically advanced. Regulators want access to more data, which will translate to stricter reporting requirements. They will likely ask to see teams using data science, machine learning, and knowledge graphs to their advantage.”

Compliance ‘must keep up with the advances of AI’

Joe Robinson, CEO of compliance platform Hummingbird, discusses how emerging technologies will dramatically change the compliance landscape.

Joe Robinson, CEO of Hummingbird
Joe Robinson, CEO of Hummingbird

“We are already seeing the shift happening now. Compliance professionals will come to the forefront of the business to align compliance solutions with business processes.

“Emerging technology like generative AI will gradually get integrated into finance and compliance processes to improve workflows, enable more efficient investigations, and help detect and prevent fraud and money laundering.

“Compliance professionals and industry visionaries must keep up with the advances of AI as criminals begin to exploit the technology for phishing and impersonation, malware, and cyber-attacks.”

Changing role of compliance with ‘advances in technology, and evolving business needs’

Andrea Maria Cosentino is the founder and host of the Crypto Club at Rise by Barclays, the global fintech community. He is also the founder and managing partner at Impact Fundry. Here, Cosentino outlines some of the ways he expects the role of compliance to change:

Andrea Maria Cosentino, founder and host of Crypto Club at Rise by Barclays
Andrea Maria Cosentino, founder and host of Crypto Club at Rise by Barclays

“The role of compliance will continue to evolve and become more strategic over the next decade. Some potential ways in which the role of compliance could change include:

“Increased focus on data privacy: With the continued growth of data-driven businesses and increased regulatory scrutiny around data privacy, compliance teams may become more focused on ensuring that their organization is in compliance with data protection laws.

“Greater use of technology: Compliance teams may increasingly use technology such as AI and ML to automate compliance processes and improve efficiency, as well as to identify and mitigate risks.

“Greater collaboration with other functions: Compliance teams may continue to collaborate more closely with other functions such as legal, risk management, and audit to ensure that compliance is integrated into the organisation’s overall strategy and operations.

“Increased focus on ethics: Compliance teams may place a greater emphasis on promoting ethical behaviour and values throughout the organisation, with a focus on building a strong culture of compliance.

“More senior management involvement: As compliance becomes more strategic and visible, senior management may become even more involved in compliance decision-making and oversight.

“Overall, the role of compliance is likely to continue to evolve in response to changes in the regulatory environment, advances in technology, and evolving business needs.”

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