2024
The State of Financial Services Compliance
Annual Compliance Health Check Report
Executive Summary
SteelEye's annual compliance health check report provides comprehensive insights into the challenges and trends shaping the compliance landscape.
The report highlights the
evolving nature of compliance challenges
and the need for firms to leverage technology to enhance compliance effectiveness
Key highlights:
37%
of firms have streamlined compliance teams amidst the macroeconomic events of the past few years.
37% of firms have streamlined compliance teams amidst the macroeconomic events of the past few years
The Ukraine war's effect on global oil prices led to widespread inflation, prompting central banks to raise interest rates, with subsequent conflicts exacerbating the situation, prolonging inflation and sustaining elevated interest rates. For financial firms, these events have had tangible impacts on compliance operations. Over one-third of firms responded by streamlining teams and making redundancies, indicating cost-cutting measures in response to increased geopolitical tensions, rising interest rates, and inflation. These events also prompted firms to reassess their staffing needs and adjust to ensure operational efficiency in the face of tighter economic conditions.
47%
of firms have implemented more stringent compliance controls in response to the banking failures of 2023.
47% of firms have implemented more stringent compliance controls in response to the banking failures of 2023
2023's banking failures prompted an industry-wide response as firms reassessed compliance measures to prevent similar issues in their own organizations. In response to the banking failures of 2023, nearly half of firms have implemented more stringent compliance controls. Almost as many respondents (44%) indicated that they have increased training for their compliance staff. Meanwhile, over a third (34%) reported allocating additional resources towards surveillance tools.
69%
of firms predict the value of eComms record keeping fines to rise.
69% of firms predict the value of eComms record keeping fines to rise
The anticipation of a surge in regulatory fines likely reflects the evolving regulatory landscape. Over the past few years, there has been a noticeable increase in regulatory scrutiny and enforcement actions surrounding record keeping of communications. High-profile cases involving record keeping failures have been continuously reported, and guidance from regulatory authorities indicates a continued tough stance on record keeping compliance. As such, 63% of firms expect the volume of fines to increase in 2024, and 69% predict the value to rise.
33%
of firms have implemented monitoring of relevant eComms channels in response to increased fines related to communications record keeping.
33% of firms have implemented monitoring of relevant eComms channels in response to increased fines related to communications record keeping
Additionally, 22% of firms have initiated projects to introduce monitoring of new channels. Given the high-profile record keeping fines seen in the financial industry over the last three years, the fact that 55% of firms have either started projects to introduce or have already fully implemented monitoring of relevant eComms channels suggests a heightened awareness of the importance of robust record keeping practices as a response to regulatory scrutiny.
30%
of firms grapple with managing the record keeping, monitoring, and controls of electric communications, and struggle to keep up with regulatory change.
30% of firms grapple with managing the record keeping, monitoring, and controls of electric communications, and struggle to keep up with regulatory change
With the increasing use of digital communication channels and the regulatory fines for off-channel communications over the past years, it should be no surprise that nearly a third of financial firms face challenges when it comes to managing the record keeping, monitoring, and controls of electric communications. The same percentage of firms struggle with keeping up with regulatory change. This is hardly surprising given the ever-changing nature of the regulatory landscape. Regulatory frameworks and guidance are continuously evolving, requiring firms to stay updated with the latest changes in laws, rules, and guidelines.
49%
of respondents believe that technological advancements will play a crucial role in enabling financial firms to meet stricter regulations in the future.
49% of respondents believe that technological advancements will play a crucial role in enabling financial firms to meet stricter regulations in the future
Despite the tough challenges confronting compliance teams, there's an air of optimism for the future. Compliance teams are resolute in their determination to intensify their efforts and allocate greater resources to compliance. They are also confident about meeting stricter regulations in the next five years, thanks partly to technology. In fact, nearly half of respondents believe that technological advancements will play a crucial role in enabling financial firms to meet stricter regulations, highlighting the strong reliance on technology within the compliance profession.
Have questions about the report?
For additional information or questions about the report, please contact SteelEye.
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