Digital transformation drives development. We look at the business benefits and why your firm should consider digitally transforming its compliance.
A recent survey shows that 100% of compliance professionals in finance using technology notice an improvement in management information (MI). While 20% of UK and US financial compliance professionals identify keeping up with the pace of regulatory change as their biggest challenge.
Almost half (44%) of these professionals said they find managing and analysing existing data challenging, meaning they cannot effectively showcase management information (MI).
Digital transformation refers to the adoption of technology in all areas of a company resulting in a significant change to how the business functions and delivers value to customers.
However, it is essential to realise that technology is only one of the drivers of digital transformation. It also involves a fundamental change requiring companies to challenge long-standing business processes while constantly evolving with any change.
To recognise the benefits of digital transformation, firms should invest in the technology needed, its consequent cultural change, and the audit of existing workflows and practices.
While digitising compliance will not help you eliminate the human capital spend, it will enable the compliance team to add more value to the business. This is because they will have to spend less time doing manual, repetitive tasks and more time devising strategies for the company's future.
In the long term, this action will reduce costs and improve the compliance team's ROI. So here are six key benefits of digitising compliance:
Research highlights the need for better digitisation and automation of compliance processes, as 50% of individuals state that at least half of their financial compliance team still focuses on administrative and repetitive tasks.
Adopting technology to digitise and automate repetitive manual tasks can allow a more robust system to detect red flags and fraud. It can also reduce human errors and improve compliance reporting capabilities relevant to management or the board.
In the long term, reducing manual errors and a more robust focus on improving the quality of data gathered and assessed can lead to cost savings for firms.
The use of manual processes within the compliance department can also make it harder to keep track of every change or step in a process. For example, this could be the case when managing, approving, and reviewing financial promotions, especially when different parts of the business are involved.
But when you digitise a compliance process, you can diminish friction and optimise workflows so that each business unit gets a clearer idea of which stage a process is in.
Traditionally, different departments in a company can save data in various places, making it challenging to analyse all the data available to source actionable trends.
Fortunately, one of the benefits of digital transformation is that it encourages you to store all compliance data in one repository, whether for due diligence, risk management, attestations, market abuse, or complaints.
When all your data is in one place, you could also choose an online tool that automatically analyses all of this data to avoid your compliance team having to interpret it manually.
This single source of truth also provides your business with the correct compliance data at the right time, reduces the likelihood of insufficient quality data, and avoids multiple data entry records. This repository also makes it easier to submit correct regulatory data when necessary.
Whether it involves completing annual attestations, making gifts or entertainment records, or assessing risks, your compliance team will require employees to fit these tasks among their day-to-day responsibilities.
Digitising these compliance processes can improve employee engagement as they can access a central platform anytime, anywhere, and on any device to submit these types of information.
For instance, if you were training employees using this type of platform, you could set up reminders of deadlines so that they can complete them on time.
As the regulatory landscape continually evolves, whether the new Consumer Duty or operational resilience, your compliance team needs to keep up with and relate these changes to the business.
Another benefit of digital transformation is that the compliance department can use technology to monitor rules and regulations necessary for a business entity. This way, your compliance team can plan for any changes to business activities early.
Similarly, an online training platform can automatically update training modules in line with regulatory changes. This allows your business to train employees on the latest changes without requiring your compliance team to create new training slides manually.
When digitising compliance, you can benefit from centralisation and improve data quality. Then you can partner with other units in the company to drive broader business change and strategy.
For example, PwC was able to build a risk control system for a pharmaceutical firm. They combined internal and external data sources to discover whether any current third parties posed a high risk to the business.
As a result, this system flagged more than 50 potential risks the business could address before entering a transaction. Similarly, digital transformation could allow your compliance team to leverage its existing risk assessment data to create value for the company.
Once businesses learn how to work in this way, the benefits of digital transformation include the following:
One of the other benefits of digital transformation involves digitising compliance tasks. This process can make meeting regulatory challenges easier while freeing up more time for the compliance team to think about strategic solutions to broader business problems.
For example, digitising the compliance process could refer to:
With the constant stream of regulation, digital transformation will help you avoid reputational damage and fines, as well as reduce the cost and complexity of managing any compliance or business changes.
The benefits of digital transformation for your compliance department include improving efficiency, minimising manual errors as well as costs, and empowering employees to work more in line with compliance processes.
We have created a series of comprehensive roadmaps to help you plan and execute compliance in your organisation.
Our best-selling Compliance Essentials Library and award-winning LMS provide a one-stop compliance training solution, including compliance refresher courses.
And our searchable compliance glossaries explain key terms and regularly report on learnings from the largest compliance fines resulting from regulatory breaches.
We also have 100+ free compliance training aids, including assessments, best practice guides, checklists, desk aids, eBooks, games, posters, training presentations and even e-learning modules!
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Last but not least, you can interact in person with thought leaders and your peers at one of our popular live webinars and face-to-face events.
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