With financial ecosystems constantly evolving and consumer expectations ever-growing, innovative approaches to compliance are more urgent than ever before. Thankfully, a variety of new technologies are coming online to help financial institutions improve compliance processes while simultaneously reducing costs, including process automation improvements, new data management tools, artificial intelligence and machine learning.
Financial institutions, however, typically do not have the inhouse know-how to implement these advanced solutions. This is why many are turning to partnerships with RegTechs. In fact, industry experts predict that the RegTech market will grow from USD 1.4 billion just a few years ago to as much as USD 6.4 billion within the next 4 years. In addition to direct financial investments to encourage the development and implementation of such solutions, financial institutions need to change their attitudes toward compliance in general, especially by involving compliance teams in more decision-making processes (e.g. the design and development of new products, services and systems). In other words, compliance needs to move from being an afterthought to being an integral part of the development process.
At the same time that technical innovations in compliance are on the rise, it is also important to note that financial industry stakeholders also work with regulators to eliminate regulatory barriers and promote a more conducive environment for innovation, especially innovation that reduces redundancies and improves accessing finance. Given the importance of compliance to all stakeholders, investing in modern, pioneering compliance solutions that leverage modern (and future) capabilities should not just be on a “nice-to-have” list for financial institutions. It needs to be a central discussion happening in board rooms around the globe.