A majority of compliance functions at financial institutions are following one of three distinct paths aimed at achieving sustainable risk management in the fast-evolving digital age. However, only one path is likely to optimize success.

Banks, capital markets firms, and insurers are investing in improving the compliance function’s ability to handle an expanded set of responsibilities. In an Accenture survey of 150 compliance officers at such firms, 89% of respondents projected increased spending for that purpose over the next two years.

At the same time, the survey revealed apparent doubts about the most modern tools and technologies that could help streamline compliance. Only 23% of participants said they considered robotic process automation to be among the most impactful technologies, and just 27% said the same for artificial intelligence.

Such views are incompatible with today’s realities, according to Accenture. “Compliance is facing a new challenge to innovate in order to manage the rising day-to-day complexity … in a world where the delivery of financial services is continually disrupted by advances in technology,” the firm wrote in its survey report.

Institutions at the forefront in the use of leading-edge technologies are “setting new standards for peers to attain.”

Accenture characterized compliance functions at such firms as “innovators” that are boosting the productivity of their talent and freeing resources to focus on higher-value investigative work.

Among the innovators, the different types of financial institutions have different compliance-innovation priorities. Insurers are showing stronger motivation to invest in AI, banks are more focused on big-data analytics, and capital markets firms are inclined to invest in transaction-monitoring capabilities, according to Accenture.

A second group of financial firms are “integrators,” in Accenture’s categorization. These compliance functions aim to share infrastructure and skills with other non-financial risk areas.

Integrators are thereby “developing a holistic view of risk exposure, both internally to regulators and internally to relevant stakeholders, in addition to reducing the risk of duplication in assessing the same control processes multiple times.”

Such steps can lay a foundation for greater innovation, Accenture said. However, they “would not likely close a gap in the adoption of innovative tools and technologies and therefore limit the opportunity for longer-term sustainability of the function.”

Accenture dubbed a third group of compliance functions “improvers” that are adopting a more watchful stance.

The approach enables institutions to learn from the experience of peers and blend “leap-frog” investments with spending on more foundational tools, Accenture wrote. However, it can also serve to maintain improvers’ positioning behind their peers, as the opportunity for true innovation can be limited.

Such inertia “can only reduce compliance’s effectiveness as risk managers and strategic advisers,” the consulting firm noted. “The pace of change within the financial services business and risk ecosystem should continue. The test for compliance is how it can innovate to maintain its relevance in the digital age.”

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