March 27, 2018
Compliance Spending is Shifting to New Technologies as Threat Landscape Expands, According to Accenture Report
Top spending priority for compliance officers is technology transformation, with half planning to deploy new surveillance tools
NEW YORK; March 27, 2018 – Faced with growing threats of ‘industry shocks’ such as cyber fraud, cryptocurrency, quantum computing and open banking, financial institutions expect to increase their compliance investments over the next two years as they seek new approaches to strengthening compliance capabilities, according to a new report from Accenture (NYSE: ACN).
Based on a survey of 150 compliance executives at financial services institutions, Accenture’s fifth annual compliance risk report, “Comply and Demand,” found that 89 percent of respondents said they expect to increase their compliance investments over the next two years. The study revealed that the top spending priority for compliance officers over the next 12 months is technology transformation, cited by 24 percent of respondents. Investments will be led with the implementation of new surveillance tools, with half (49 percent) of respondents planning to deploy these technologies this year.
“Time has run out for compliance departments that want to take a more watchful, cautious stance toward innovation. Industry shocks are becoming more commonplace in this increasingly volatile risk environment, and the creation of annual plans driven by once-a-year risk assessments is no longer an effective compliance roadmap,” said Steve Culp, a senior managing director at Accenture and global head of the company’s Finance & Risk practice. “As financial institutions manage more digital threats and an evolving regulatory landscape, they must act quickly and embrace a new mindset driven by innovation across technology, talent and operating models.”
The report notes that to ensure returns on technology investments, companies will need to evolve the skillsets of their compliance employees, as 76 percent of respondents acknowledged a skills gap between their group’s current compliance skills and those required to apply insights through data and analytics and to drive technology innovation. Having access to the right data to identify risks will be another key component, as one-third of respondents (31 percent) cited data quality issues as a significant barrier for transforming the compliance function over the next three years.
“Compliance departments are finally taking steps to adopt new technologies, but strategic investments in enterprise-wide regulatory technology and intelligent automation must be complemented by the right talent mix,” said Samantha Regan, global co-lead for the regulatory remediation & compliance transformation group within Accenture’s Finance & Risk practice. “If compliance professionals don’t understand the ecosystem of risks they face or fail to obtain strategic insights from the data gathered, they can expect limited returns on their investments.”
Most challenging risks for compliance professionals in the next 12 months
(Click on Graphic to Enlgarge)
When asked to rank the top three compliance risks that will be the most challenging to manage within the next year, respondents most often cited cyber risk (21 percent of respondents). Cyber risk was also the most challenging to manage three years out. Interestingly, data and information risk and privacy risk were among the top three most challenging risks to manage within the next year and three years. This suggests that the General Data Protection Regulation could be putting a much-needed focus on the importance of customers’ data privacy and security.
The percentage of respondents who cited conduct and culture risk as a top-three concern dropped noticeably, from 27 percent in last year’s survey to only 7 percent this year, while only 14 percent cited product risk as a top-three concern this year. Given the ongoing incidence of corporate misconduct, mostly related to mis-selling and unethical behavior, and the proliferation of virtual currencies, these findings could indicate that the compliance function is losing sight of key risks and less prepared to respond proactively.
For the report, Accenture surveyed 150 compliance officers at banking, insurance and capital markets Institutions across 13 countries in North America, Europe, Asia-Pacific and South America: Australia, Brazil, Canada, China (Hong Kong), France, Germany, Italy, Japan, Singapore, Spain, Switzerland, the United Kingdom and the United States. Of the respondent organizations, 58 percent have annual revenues between US$1 billion and US$10 billion; 17 percent have annual revenues between US$10 billion and US$20 billion; and 25 percent have annual revenues greater than US$20 billion. The online survey was conducted between December 2017 and January 2018.
Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions – underpinned by the world’s largest delivery network – Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With approximately 442,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at www.accenture.com.
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