Thomson Reuters Regulatory Intelligence has carried out its 12th annual survey on the cost of compliance focusing on the challenges the compliance functions at financial services firms around the world expect to face in the year ahead.
The annual cost of compliance report produced by TRRI is the trusted and acknowledged voice of risk and compliance practitioners around the world. This blog and associated infographic puts a spotlight on the results of the survey from the Asia Pacific region.
The 2021 survey generated responses from over 720 practitioners worldwide, representing global systemically important financial institutions (G-SIFIs), banks, insurers, asset and wealth managers, broker-dealers and payment services providers. Over the lifetime of the report there have been more than 7,000 participants and more than 50,000 downloads in more than 120 countries by financial services firms as well as regulators, law firms, governments and consultancies.
The pandemic has changed ways of working, probably permanently. The changes have extended to the compliance function itself with new governance structures being adopted to ensure the flow of management information remains tailored to the evolving circumstances to facilitate better awareness of the risks at, in particular, the most senior levels within the firm. The 2021 cost of compliance report looks at shaping the future set against a backdrop of widespread digital transformation, an evolving supranational regulatory change agenda and shifting political expectations of supervisors themselves.
There is no doubt that compliance functions have risen to the challenge of the pandemic and the crisis has shown that firms can change and adapt at speed, but challenges still exist, and this year’s cost of compliance report considers those challenges. Challenges which could also be seen as additional, practical, drivers for change in their own right.
One of the major challenges for compliance is the sheer expected volume of continuing regulatory change.
Sixty seven percent of firms in Asia, and 77% of firms in Australasia, reported expecting the volume of regulatory information to increase in the coming year. This is comparison to 78% of firms on a global basis expecting the volume of regulatory information to increase.
A key feature of the challenges ahead and both a driver and enabler of change is technology. Without the rapid and successful deployment of technology financial services firms would not have been able to invoke wholesale remote working for their employees.
APAC is seen to have embraced technology ahead of the rest of the world. In terms of regtech solutions affecting the management of compliance, 49% of firms in Asia and 44% in Australasia reported deploying regtech. This is well ahead of the global figure of 34%.
Perhaps unsurprisingly the biggest compliance challenge arising from the pandemic is seen to be remote working. Alongside that 65% of firms in Asia and 71% of firms in Australasia expect more compliance involvement in cyber resilience – again ahead of the global figure of 62%.
Compliance officers need to shape their own future and alongside the problems the pandemic brought, it also has presented the financial services industry and compliance officers with an opportunity.
Regulators are seen to have had a ‘good’ crisis, ideally firms should be able to say the same. Regulators have already committed to post-pandemic reviews. Firms may well consider that now is the time to engage with regulators about change strategies in firms and to flag key issues and technological and other innovations and be able to capitalise on early feedback and direction.
In summary change is due. The social and economic environment provides firms and compliance officers with an opportunity to shape future changes. Planning and preparing a future direction that addresses all the challenges is vital and compliance officers need to be ahead of the game in their thinking.