Implementing a compliance program is a major endeavor for financial firms, typically requiring a large investment of time, resources and labor. This is true now more than ever as recent financial regulations like the Dodd-Frank Act, MiFID II and MAD/MAR continue to be rolled out.
Despite the many discussions happening around what firms need to do to comply with these regulations, especially over the last year, many still face major obstacles in meeting their requirements.
Staying in front of regulations
According to a survey of more than 170 compliance professionals across over 110 different firms at the 2016 Bloomberg Vault Compliance Symposium, nearly half (45%) of attendees said their firms were not yet ready to meet upcoming MiFID II and MAD/MAR obligations. And for more than a third (38%), the biggest challenge they continue to face in meeting global regulatory requirements, like MiFID II, is poor technology and an overreliance on manual processes.
These manual processes, which used to be much more manageable when financial firms dabbled only in a few asset classes in one centralized office, are now becoming untenable as the industry expands on a global scale. Compliance teams now have expanded scopes to manage an ever-expanding array of asset classes and investment vehicles. In addition, they must also ensure their data is both secure and of a certain quality level.
On top of all that, they have to stay up-to-date on all the latest regulations. In fact, a third of attendees stated that their understanding of regulatory obligations was a major barrier to ensuring compliance across their organizations. As a result, today’s CCOs have to take on the role of ‘compliance technologists,’ interpreting regulations in real time to ensure the effectiveness of technology systems and processes.
Investing in compliance systems
The good news is that there is an increased awareness of the business value of compliant systems and processes. Top CCOs are advancing the case for greater investment by communicating to CEOs and boards the business impact not only of compliance, but also the cost of regulatory failures.
The same Bloomberg Vault survey showed that 76% of compliance officers had seen an increase in resources and compliance-related investments to help meet regulatory challenges. At least a fifth reported a more than 100% increase in compliance-related investments.
Showing the ROI of compliance
While it can be challenging to measure the ROI of compliance, new technologies and analytics can help compliance officers make sure that their efforts both meet regulatory requirements and enhance business functions.
Implementing consistent analytics systems can be a boon for many financial services firms that are looking to move away from a legacy of swivel-chair compliance, where an officer performs each task of their workflow on disparate systems that don’t talk to each other. By implementing a single solution that monitors various parts of the business simultaneously, compliance officers can more readily connect the dots within the growing amount of data their organization creates and better identify issues that might otherwise go unnoticed.
In order to get the most benefit out of technology, compliance staff must understand the underlying businesses and ask the right questions when issues arise. By asking better questions, compliance can use technology solutions to not only eliminate manual controls, but also to integrate approaches that help the business work more efficiently and positively impact company performance.