3 common compliance myths — and how technology can lead the way forward

Regulatory compliance is evolving faster than ever. Financial institutions face a wide array of regulations they must comply with, spanning areas such as data privacy, anti-money laundering, payment security, fraud prevention, and more. Staying up to date on both national and international requirements adds another layer of complexity. Most of the sector spends $181B annually on these efforts — a significant burden for many organizations.

In this article, we’ll bust some common myths about regulatory compliance and explore how technology can help you navigate increasingly complex regulations. For a deeper dive, get your copy of Cracking the code: A proactive approach to regulatory compliance from RegTech and AuditBoard.

Myth #1: Compliance doesn’t create business value

Regulatory compliance is often misunderstood. One of the most common misconceptions is that compliance is merely a bureaucratic burden that slows down operations and drains resources. This also leads some to view it as a basic tick-box exercise that offers little enterprise value. Contrary to this belief, an effective compliance process can actually save a firm time and money by removing the risk of regulatory fines, fraud, and reputation damage.

Myth #2: Compliance is only the compliance team’s job

Another common misconception is that only the chief compliance officer and compliance teams handle compliance. In truth, this responsibility extends across the organization. When firms isolate compliance teams, they set themselves up for failure. Compliance teams play a crucial role in ensuring a firm adheres to regulations, but every individual in the firm is responsible for following the rules and helping the business stay compliant. Failing to comply carries a significant risk.

A Globalscape study found the average non-compliance cost was $14m. However, the study shows the cost can range from $2m up to $40m. A culture of compliance must be fostered within the firm, ensuring all employees understand how compliance impacts their roles and daily tasks.

Myth #3: Compliance is static

Another myth is that compliance is static. Some firms implement a robust compliance framework and assume they can leave it untouched. However, that is a recipe for disaster. Compliance systems need regular monitoring, updating, and adaptation so they can keep pace with evolving regulations and adapt to the company’s growth and operational changes.

Transform compliance from a cost center to a cost-saving function with technology

Firms are looking to the power of regulatory technology solutions to optimize and streamline compliance. A growing number of technological trends are currently transforming how financial institutions approach compliance. Some of the key technologies include AI, machine learning, blockchain, and real-time monitoring, which are all helping to meet the growing challenges posed by the increasingly complex digital environment. These technologies improve workflows and help firms navigate increasingly complex regulations.

Technology is critical to maintaining a firm grasp on risks, such as falling victim to changing regulatory requirements or failing to update operating systems that have veered into non-compliance. Companies must now ensure their regulatory obligations match the risks they face and align with their internal processes and workflows. The best route to do this is through the harnessing of technology.

Building a connected ecosystem

While technology can be the key to improving compliance, it will fail to meet its full potential without connectivity across functions. A key challenge here is building adaptable and contiguous data sets across the compliance, risk, and assurance programs that align with each other.

This poses a significant challenge for larger organizations with decades of legacy systems, where data sets are often complex and siloed. Disconnected data reduces the accuracy and reliability of technology, leaving compliance teams reliant on inefficient processes or unnecessary manual input. However, if data quality aligns with regulatory obligations, technology can become a powerful tool to guide businesses through regulatory pitfalls.

RegTech solutions are helping to overcome this challenge and give compliance teams the power to connect their entire risk landscape through a unified system. For example, AuditBoard’s regulatory compliance management (RegComply) solution can connect a firm’s audit, infosec, ESG, risk, and compliance programs into a centralized base. This hub gives compliance teams a clear view of controls, policies, risks, frameworks, and issues.

Without connectivity, compliance teams often resort to being regulatory compliance firefighters. Proactive alerts on evolving regulations and obligations, purpose-built workflows to drive stakeholder engagement, and AI-recommended insights on change impact and risk assessment, such as those offered through RegComply, allow compliance teams to act faster and more confidently. Compliance teams can become trusted advisors that contribute to strategic business growth and not just an efficiency and cost burden.

Strong, connected datasets help firms boost visibility, promote collaboration, and unlock insights. They also empower compliance teams to continuously monitor regulatory updates and identify relevant obligations.

Managing shifting regulations

Freeing up time for compliance teams is one of the biggest boons of technology. As the pace of regulatory change continues to accelerate, compliance teams are stretched trying to assess updates, identify key points, and assess how that will impact operations. This takes a lot of time and manual work. Technology can automate regulatory change monitoring and provide teams with insights on how to proceed. Ultimately, technology can help reduce weeks of manual work down to days, or even hours.

New solutions like RegComply can organize content by obligation and assign ownership. Users can assess what’s relevant to their business and map it to existing risk and control frameworks. From there, teams can track control effectiveness through self-assessments, manage policy updates, and evaluate overall regulation effectiveness — all in one place. Furthermore, it offers AI-recommended mapping of regulatory obligations to existing risks, controls, policies, and issues.

Download Cracking the code: A proactive approach to regulatory compliance to learn more about today’s regulatory landscape and how you can use technology to turn compliance challenges into a strategic advantage.