RegTech Investment Compliance Spending

regtech

By FINTECH Books Contributor, John Humphries  and Patrick Fogarty
Follow: @RiskPriorities

We have all seen the news about banks paying massive fines, penalties, legal fees and compliance costs for failing to comply with regulations. Since the start of the Global Financial Crisis (GFC), banks have received well over $250 billion in fines, penalties and legal fees. In addition, financial institutions are spending in excess of $70 billion on compliance costs annually.
Many of these fines have come with complex regulatory issues, which banks have fixed or are in the process of remediating. These regulatory issues are often challenging, time-consuming and costly.

As additional context, since the start of the GFC, banks have experienced first-hand a dramatic increase in regulatory scrutiny and oversight, which is not going away anytime soon.Some recent Compliance surveys have highlighted Compliance Officers’ concerns over personal liability, and individual accountability is being stressed by regulators.

We have all seen the news about banks paying massive fines, penalties, legal fees and compliance costs for failing to comply with regulations. Since the start of the Global Financial Crisis (GFC), banks have received well over $250 billion in fines, penalties and legal fees. In addition, financial institutions are spending in excess of $70 billion on compliance costs annually.

Many of these fines have come with complex regulatory issues, which banks have fixed or are in the process of remediating. These regulatory issues are often challenging, time-consuming and costly.

As additional context, since the start of the GFC, banks have experienced first-hand a dramatic increase in regulatory scrutiny and oversight, which is not going away anytime soon.Some recent Compliance surveys have highlighted Compliance Officers’ concerns over personal liability, and individual accountability is being stressed by regulators.

It is evident that the above factors have already and will continue to influence Compliance spending and RegTech investments in the future. Money will continue to flow into the sector for the foreseeable future. However, are there other important drivers of spending and growth in the RegTech space?

Are Financial Service companies beginning to recognize RegTech as a paradigm shift and strategic opportunity, which will help them successfully execute their business models, innovate and achieve a return on investment? Also, will this recognition help to spark significant future investments? This chapter will address these important questions and consider how some companies now think about Compliance spending, and examine the decision-making process for including RegTech projects in budgets.

While many Financial Service companies have made substantial investments in Compliance processes and RegTech, many continue to operate highly manual processes, which lack real-time transparency for effective decision-making. We will explore how these factors along with regulatory expectations will also fuel future RegTech investments.

It is evident that the above factors have already and will continue to influence Compliance spending and RegTech investments in the future. Money will continue to flow into the sector for the foreseeable future. However, are there other important drivers of spending and growth in the RegTech space? Are Financial Service companies beginning to recognize RegTech as a paradigm shift and strategic opportunity, which will help them successfully execute their business models, innovate and achieve a return on investment?

While many Financial Service companies have made substantial investments in Compliance processes and RegTech, many continue to operate highly manual processes, which lack real-time transparency for effective decision-making. We can explore how these factors along with regulatory expectations will also fuel future RegTech investments.

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