Compliance automation still lags – survey

Despite significantly increasing regulatory burdens hitting the asset management industry in recent years, a survey by Aite Group and Cordium has found that there is a significant lag in the intent to implement so-called ‘regtech’ versus how much has actually been put in place and is being used daily.

The firms surveyed some 120 capital markets firms, and found:

• Investment in regulatory technology (regtech) is set to rise further over the next 12 months: 45% have increased investment in dedicated vendor technology for compliance, with a particular focus on cloud-deployed systems
• 53% have invested in central platforms for compliance documentation tracking and a further 13% are considering introducing such a platform in the next 12 months
• Only 4% feel they have an entirely strategic approach to regulatory reform and only 2% have fully automated compliance support, leaving firms open to risk from manual processes

That significant ongoing reliance on manual processes raises a risk on non-compliance – think of the new reporting requirements under Mifid II for example. The survey report, titled  Regtech Realities: Moving from Reactive to Proactive Compliance, makes further suggestions on how the sorts of firms affected by this non-compliance risk – which stems from errors and mis-reporting that can creep in when the relevant data is manually effected – can prioritise their response. The survey notes that “only 8% of respondents use formal metrics to measure the impact of non-compliance and 43% don’t measure it at all”.

Automation is seek as key. Developments such as so-called cloud deployment of technology solutions, as well as language processing, are set to deliver increasing support to businesses in future in the financial services sector, according to Virginie O’Shea, research director at Aite Group, while Doug Morgan, group chief executive at Cordium added that firms can improve their overall business and compliance culture by looking to technology solutions to the demands being made by new regulations.


Jonathan Boyd
Editorial Director of Open Door Media Publishing Ltd, and Editor of InvestmentEurope. Jonathan has over two decades of media experience in Japan, Australia, Canada and the UK. Over the past 17 years he has been based in London writing about funds and investments. From editing the newsletter of the Swedish Chamber of Commerce in Japan in the 1990s he now focuses on Nordic markets for InvestmentEurope. Jonathan was awarded Editor of the Year at the Professional Publishers Association (PPA) Independent Publisher Awards 2017. Shortlisted for the same in 2016, he was also shortlisted in 2017 and 2015 for the broader PPA Awards category Editor of the Year (Business Media).

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