Regtech can help CIOs enhance their compliance strategy

Stop making mistakes and pay more attention to regtech.

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Compliance is a costly and cumbersome aspect of managing a business. Effective compliance programs can help a company achieve its goals on the international stage, while avoiding costly regulatory mistakes.

Executives that are responsible for the regulatory process in their firms understand how important a sound compliance strategy is. CIOs, in particular, understand the costs of failing to effectively manage this data — major, expensive interruptions to technical operations.

In fact, more and more executives are expressing plans to increase the budget for compliance and regulatory technology (regtech) solutions. A recent report from Accenture found that, “Among the executives predicting the continuation of higher spending on compliance over the next two years, nearly half (48 percent) anticipate increases of 10 percent to 20 percent and nearly one in five (18 percent) expect increases of more than 20 percent.”

The problem is, despite a clear demand from business leaders, the entire compliance industry is based on silo'd functionalities and vendors that rarely integrate every aspect of the process. Accenture’s report put it plainly, “Compliance functions are struggling to keep pace with the industry’s rapid digital transformation.”

Failure to keep up is not an option. Boston Consulting Group’s data shows that banks have paid over $321 billion in fines since 2008 due to regulatory errors. With recent advances in integrated tech platforms, however, companies are beginning to realize that they can consolidate their compliance programs for improved functionality and cost effectiveness.

Integrated platforms

These fines are one of the many motivators driving companies to upgrade the regtech they have at their disposal. Thomas Sehested is the regulatory expert and CEO of GAN Integrity, a global compliance technology platform. He offers up another incentive for corporations upgrading their regtech:

“It’s difficult to implement broad strategic efforts when critical data relating to due diligence, case management, e-learning, and conflicts of interest issues are housed in different systems. Being able to view your entire compliance program in a single place allows a full-picture view and provides a better baseline for strategic initiatives.”

By leveraging integrated platforms, companies can start to consolidate their compliance practices, increasing visibility and functionality.

While these technologies are taking off, quite a few companies are still dragging their feet. One of the main reasons is that many of them operate on legacy systems that at one point were very costly, whether they were developed in-house or by a third party. Sunk costs related to these systems make some companies hesitant to invest in new technology, but newer platforms can reduce the costs associated with regulatory violations that these solutions might miss.

Combining functionality

One of the key solutions new regtech and compliance tech solutions bring to the table is their ability to merge functionalities across varied datasets. Instead of having HR data and legal data stored separately, integrated platforms allow on-demand access by anyone, anywhere with appropriate credentials.

Leveraging data

Another way these integrated technologies are improving compliance strategy is that they are more clearly tying compliance efforts to the bottom line. Instead of having to wonder where compliance budgets and efforts are being invested, platforms are helping executive teams assess the performance of their efforts and make real-time adjustments when necessary.

Finance and risk expert, Samantha Regan shared, “Technology-adoption inertia is the greatest risk to the compliance department’s future effectiveness as a strategic advisor and risk manager.” As new systems come online, at increasing rates, it’s important that compliance keeps up with the pace of technological advances.

For executives considering what next steps are needed in revamping their compliance strategies, the key is to conduct excellent due diligence on any new technology to ensure it is the right fit for your company. Sehested details, “While automation can never replace the judgment of compliance professionals, technology can address purely administrative compliance processes, freeing time for professionals to focus on substantive and strategic initiatives.”

CIOs that are able to effectively leverage new advances in regtech will experience a reduction in costly compliance mishaps and avoid taking a public relations hit.

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