Innovative approaches to compliance

November 2019

Following a decade of massive post-crisis investment in regulatory compliance and risk management, banks are now identifying innovative improvements to the efficiency and effectiveness of their compliance efforts. An EY adviser said, “It’s an interesting time. The last 10 years were about building compliance up, and a lot of money has been spent. The next 10 years will be about rationalizing and cutting costs while still improving effectiveness.” Firms are looking to new technologies to transform how they use data and explore opportunities for collaboration.

The compliance function can be an enabler of innovation, a driver of business rather than a deterrent, but this may require some fundamental adjustments to how the function is viewed, managed, and incorporated into operations across the firm. Obstacles such as archaic legacy systems, poor data management, cultural resistance to change, lack of coordination and communication across different functions, and evolving regulatory requirements continue to burden the efficiency and effectiveness of the compliance function. “Everyone wants to improve compliance and better use technology and innovation in this space to be more effective, but most banks are facing massive obstacles to accomplishing that,” reported one participant.

On June 13 in New York and September 25 in London, BGLN participants met to discuss innovative approaches to compliance and some of the questions these developments raise, including the potential for regtech to help large banks and how incumbents can leverage compliance innovation across other functions in the firm.

This ViewPoints synthesizes the key themes which emerged from the discussions in each of these meetings, and from conversations with network participants beforehand and immediately afterwards. These meetings also included discussions on emerging business models in financial services.

Themes from those parts of the discussions are summarized in a separate ViewPoints. This ViewPoints is organized around the following sections:

• Innovation in compliance
• Addressing challenges to progress