Firms taking the innovator path use new tools and methods to strengthen core risk and control capabilities, and to extend the breadth and depth of compliance’s coverage. They are establishing leadership positions through investments in capabilities such as advanced analytics, artificial intelligence, or managed services.
Some firms are gaining efficiency by better integrating their compliance-related capabilities, as well as second-line-of-defense functions. Because they share infrastructure, skills and capabilities, integrators create a more holistic view of risk exposure, both externally to regulators and internally to key stakeholders. These firms are laying building blocks for further innovation.
Adopting a more watchful approach, some institutions are waiting to see what works for their peers. While these firms can benefit by adopting more informed solutions that build on others’ experiences, they also limit their ability to truly innovate. More than half (52 percent) of institutions we surveyed struggle to firmly grasp business needs, perhaps validating their need to watch wider industry practice before placing more strategic bets in capability.
According to our study, compliance functions aren’t channelling investment increases toward the tools and technologies they need to build sustainability.
The danger of failing to invest? If the compliance function can’t keep up, it will fall behind the rate of change in the financial risk ecosystem. It won’t be able to meet new demands from counterparts throughout the business. As a control function—and as a strategic business advisory function—compliance could lose its stature.
The financial marketplace won’t stop changing. It’s time for compliance leaders to support their functions, so they won’t stop changing either.