What will the state of financial compliance be in 2022?

For nearly two years now, our lives have been shaped by the devastating consequences of the once-in-a-century pandemic that has ravaged the globe. Everything from the way we do business to the way we socialise has seen a fundamental shift.

Whether it’s small businesses or large, multinational conglomerates, every single company felt the very real economic, social, and technological impacts of this pandemic, and the financial sector is no exception.

Financial institutions, which relied on on-site operations, transitioned to remote service delivery methods with distributed workforces. This has affected every function of these institutions, including financial compliance.

Regulators have also imposed new regulations to protect and sustain financial institutions during the pandemic. All of these factors have made regulatory compliance more dynamic and complex than ever before.

Compliance teams across these organisations have, therefore, been forced to adopt new strategies and untested technologies to ensure these regulatory guidelines are followed and non-compliance risks are averted despite the systematic shifts in the industry.

That said, with no clear timeline for a complete return to normalcy and the Delta variant spreading at an alarming rate, 2022 also looks to be a year of major changes for regulatory compliance processes in the finance industry.

So, what will the financial compliance landscape look like in 2022?


Distributed workforces will become more common with strict communication surveillance

Even though we’ve seen many countries relax lockdown rules, many financial institutions across the globe are still operating with a sizable portion of their workforce working from home.

For their part, financial institutions have doubled their commitment to WFH arrangements in the future since many of them experienced a rise in productivity with remote setups.

According to a report from PwC, 69% of financial institutions expect to have more than 60% of their workforce on WFH arrangements after COVID-19. 35% of employees also expressed that they would like to maintain a permanent WFH arrangement.

Despite its popularity, however, these arrangements must comply with the new WFH guidelines unveiled by financial regulators to minimise the risks associated with distributed workforces.

One of those regulations is increased surveillance on internal communication channels across all financial institutions to prevent threat actors from compromising financial information integrity.


Financial compliance will move to the cloud

According to many experts, ensuring compliance despite the distributed workforce will be one of the biggest challenges for financial institutions in 2022.

Generally, financial institutions leverage on-site RegTech solutions in their compliance workflows, as these solutions give them complete control over the implementation.

With WFH arrangements on the rise, however, the effectiveness of on-device RegTech solutions will decrease as many of these solutions will become obsolete. Financial institutions are more likely to adopt cloud-based RegTech solutions for their compliance processes, as these solutions are much more suited for distributed workforces. 

These solutions will allow financial service providers to scale their financial workflows to meet WFH requirements and reduce compliance costs by eliminating the need for on-site computing and storage.

Machine learning will be integrated more firmly into compliance workflows

In 2022, machine learning will also see a greater rise to prominence across compliance training and monitoring.

With advances in AI and neural networking, modern machine learning algorithms are more capable of performing complex compliance tasks that would otherwise require human resources.

These machine learning solutions will allow financial institutions to implement proactive compliance workflows by training employees on future changes in the regulatory landscape.

In addition to this, machine learning will also allow compliance teams to police and monitor their compliance tasks to identify and report discrepancies and take corrective measures to rectify these issues.


The face of financial compliance is changing

Due to challenges brought on by the COVID-19 pandemic, the way financial institutions deliver their services has seen a fundamental shift. 

In response to this, the regulatory landscape has also changed to reflect the needs of consumers and the industry at large.

2022 also looks to continue this trend of major changes in the compliance landscape, and financial institutions need to be prepared to meet these trends, opportunities, and challenges head-on.

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