5 Keys To Using Compliance Automation to Your Regulatory Advantage

Tim Ward  |

Image source: StarCompliance

Ensuring regulatory compliance has always been challenging. In recent years, the task seems to be growing more difficult by the day, as the pace and scope of new compliance regulations continue to dramatically increase. In fact, according to Thomson Reuters, there were over 67,000 new regulatory alerts from more than 1,200 bodies in 2020 alone.

Each alert carries a new set of risks and regulatory compliance challenges for financial firms. For example, privacy regulations such as the General Data Protection Regulation pose a conundrum as compliance teams must find the right balance between employee surveillance — a regulatory requirement — and protecting the privacy rights of individuals, now also supported by a legal framework.

Meanwhile, new regulations are raising the stakes for chief compliance officers and other company leaders. The U.K.’s Senior Managers and Certification Regime, for example, holds individuals in leadership positions more accountable for compliance wrongdoings within their teams and operations.

Many firms are turning to compliance automation software to help oversee employee activity at scale and reduce risk. Driven by artificial intelligence and machine learning, these tools can help organizations remain flexible, efficient and compliant in an ever-evolving regulatory landscape.

Software, however, isn’t a silver bullet: There will always be compliance situations that require the experience and judgment of human beings. Investigating complex series of events, making judgment calls on gray areas or having difficult conversations with colleagues are all good examples. What compliance automation software is good at is handling the more menial tasks to give compliance teams more time and energy to focus on matters that demand closer human attention.

Here are five tips for implementing and using compliance automation to free up compliance officers’ time for higher-value tasks and to enable companies to stay ahead of current and future regulatory compliance challenges:

1. Identify the opportunities. Take a look at how your company currently handles compliance, and search for areas that could be fully or partially automated. Typically, the best candidate areas will have structured, repeatable tasks, e.g., the collection and sorting of data, continuous monitoring of thousands of records and data sets, data submission to third-party systems and partners, production of reports, and task or due date reminders. Even if full automation is not possible, compliance software can still help make an arduous manual process more effective and efficient.

For example, software could optimize a review or investigation process by automatically collecting all pertinent information in one place. With every piece of relevant data in front of them, compliance officers can make faster, better-informed decisions. Similarly, compliance technology could streamline a data entry task by scanning documents and using AI to extract key information. When you can automatically transform data from unstructured documents into structured lists tagged with consistent taxonomy, assessing your organization against new regulations becomes a much quicker process.

2. Start small. You don’t need to make a big splash to see benefits from compliance automation. Instead, try starting with a small project involving a hand-selected subset of employees.

Choose a mixture of people who have previously demonstrated enthusiasm toward compliance and people who have typically resisted compliance-related activities. That way, you can conduct a more representative experiment and develop a fuller, more accurate understanding of how automation can help your team overcome friction surrounding compliance activities. Keep close tabs on system usage and feedback, and adapt your processes accordingly. Once you feel comfortable, scale your use of compliance software to other employee groups within the business.

3. Look for solutions that foster community. Many compliance teams are in the same boat as they explore how compliance technology can help their firms keep up with the expanding size and scope of global regulations. This is a great time for compliance professionals to engage with peers in their space. When considering compliance software, they should look for a solution that interacts with their client community and works to bring that community together to facilitate peer-to-peer learning. Sharing experiences and gaining access to a community of people who are seeking solutions to your same challenges will help you grow. Some firms will be ahead of you in finding these solutions and some will be behind, but a 30-minute conversation with a peer can go a long way in preventing your firm from heading down the wrong path and wasting valuable resources.

4. Create a culture of compliance. Compliance is more than a piece of software. Think of it as a holistic system that assembles the right combination of people, processes and tools. Compliance technology is a useful tool in and of itself, but it must be accompanied by people who understand the software and processes thoroughly to maximize its potential. Ultimately, every firm needs to foster a culture of compliance to truly succeed and to experience the full benefits and ROI of compliance software. Employees at all levels need to understand why compliance is important, and they need to know what tools and processes they have at their disposal to help get the job done.

5. Gather feedback. Check in frequently with employees to see how compliance software is improving their experience and ability to complete compliance-related tasks. Gather feedback from a wide range of stakeholders, including executives, managers and frontline compliance professionals. Your decisions about what and where to automate and how to adapt the system to meet your needs should be influenced most by where your stakeholders need it. Ask them to identify tasks that require a large time investment, produce inaccurate results or are simply unenjoyable. If the technology you have in place is making their lives easier, they will ultimately be more engaged — and higher engagement leads to more effective compliance.

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Financial firms are feeling extra pressure in navigating countless regulatory compliance challenges every day. Compliance technology can play a key role in helping them cope with new regulations, but it can only do so much. If you pair compliance software with high-quality people and processes, your firm will be better prepared to successfully manage the ever-changing regulatory environment.


Tim Ward is the director of product strategy and marketing at StarCompliance. He’s an experienced enterprise software professional who has spent the majority of his career in the financial industry within the area of compliance, particularly in the field of employee conflicts of interest. In his current role, he helps current and prospective clients realize the power of StarCompliance’s software and imagine the future.

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Equities News Contributor: Tim Ward

Source: Equities News

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not necessarily represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer.

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