The US banking industry continues to rely heavily on manual processes for regulatory compliance, with 42% of professionals reporting frequent use of such methods, according to a new study. An additional 31% of respondents in Wolter Kluwer’s 2024 Regulatory & Risk Management Indicator survey indicated occasional reliance on traditional means of compliance. The poll, conducted between July and September, gathered responses from 258 professionals representing banks, credit unions, and lending organisations.
“Technology is deemed the most important aspect of automating a regulatory change management program (31%); speed, analysis, and maintaining a regulatory library are each perceived to be relatively equal in importance,” said Wolters Kluwer compliance solutions market strategy and compliance analytics director Jason Keller.
Regulatory concerns show decline, but automation gaps persist
The findings from the survey also revealed a decline in the Indicator Main Score, which measures overall regulatory and risk management concerns. The score dropped from 119 in 2023 to 99 in 2024, reflecting reduced regulatory activity and improved confidence in compliance management. However, the continued dependence on manual workflows underscores a significant gap in automation adoption across the industry.
Planned investments in automation suggest a gradual shift may be underway. 64% of respondents anticipate increased spending on digital lending systems, while 63% expect to invest more in automating regulatory change management. Of these, 39% reported plans for significant investment in digital lending systems, and 32% indicated similar intentions for regulatory management tools.
Compliance with the Consumer Financial Protection Bureau’s Small Business Data Collection Rule, known as Section 1071, remains the most pressing regulatory issue. It was cited as a high or moderate concern by 69% of respondents. Other key challenges include adapting to fair lending regulations and new legislation (61%) and implementing Community Reinvestment Act requirements (60%).
The survey also identified top priorities for compliance management system upgrades. 56% of respondents listed regulatory content management as a primary area of focus, followed by updating policies and procedures (50%) and improving quality assurance capabilities (47%). Furthermore, 59% of respondents highlighted cybersecurity risks as a top concern, with compliance risks (41%) and credit risks (40%) also ranking high among key operational challenges.
The findings suggest that while automation is gaining recognition as an essential tool for managing compliance, the widespread reliance on manual processes continues to slow progress. As regulatory demands evolve, the US banking industry faces mounting pressure to adopt technology-driven solutions to streamline compliance and mitigate risks effectively.
Recent 2024 surveys underscore automation’s growing impact on banking compliance, pointing to a shift in industry priorities. The Nasdaq Global Compliance Survey, which polled 94 compliance professionals, found that 35% expect artificial intelligence to drive significant changes in compliance processes within the next year, a sharp increase from just 9% in the previous year. The survey reflects the growing confidence in AI’s ability to streamline compliance operations and improve regulatory oversight. Additionally, a report by Resistant AI highlights how automation not only enhances compliance efficiency but also helps address emerging challenges in fraud detection and management, emphasising the dual benefits of adopting advanced technologies in the financial sector.
Read more: CIOs in the banking sector want to harness generative AI – but they’re still hesitant about where to start
