Nasdaq Study Shows Firms Turning to AI and Data Scientists to Enhance Regulatory Compliance
December 03 2024 - 2:30AM
Nasdaq, Inc. (Nasdaq: NDAQ) today released the results of its ninth
Annual Global Compliance Survey, revealing the latest trends and
challenges in compliance and surveillance within the financial
services industry. The global survey gathered insights from 94
compliance professionals across the sell-side, buy-side, and
financial market infrastructure sectors.
“The financial services industry is operating in an incredibly
complex and dynamic environment, having to respond to ever more
sophisticated regulatory requirements, financial crime, and
operational challenges,” said Ed Probst, Senior Vice President,
Regulatory Technology at Nasdaq. “Technologies like AI and cloud
have the power to enhance strategic insights and dramatically
improve efficiency but require a workforce able to understand,
develop, and deploy the capability. We’re seeing firms increasingly
turn to regulatory technology platforms and supplement their
workforce with data scientists and other specialists, to handle the
changes and challenges of regulatory compliance.”
Focus on AI, Cloud, and Data Quality
Faced with greater regulatory oversight, firms are focusing not
only on adhering to regulations but also leveraging advances in
technology to gain a strategic edge. Of the respondents, 35% expect
technologies like AI to be the biggest driver of compliance process
change over the next year, compared to 9% last year, and 0% the
year prior. This shift marks a move away from simple workflow tools
towards more data-driven investigative approaches.
Improving data quality, integrating data sources and the cloud,
and developing cross-product surveillance and related tools were
all identified as areas where firms are likely to invest over the
next 12 to 24 months. One major challenge this could help address
is in the case of false positives, where advanced data processing
and AI can be used to improve the quality of alerts flagged up by
automated systems. Many compliance teams have devoted significant
effort to minimizing them, with almost 90% acknowledging that
reducing the number continues to be extremely or somewhat
challenging. These false positives can be highly disruptive,
leading to unnecessary investigations, wasted resources and
potential delays in identifying genuine threats.
Investment in Data Management and Skilled
Teams
Looking ahead to the next 12 to 24 months, firms are redirecting
their investment in talent towards data scientists (12%) and
additional support staff (13%). This shift indicates a growing
recognition among organizations of the critical role that advanced
technology and sophisticated data analysis plays in strengthening
modern compliance systems and controls. In addition, the increased
demand to hire junior resources reflects a need to analyze ever
increasing amounts of data, and that rapid deployment of AI and
other algorithmic processes are not being delivered as part of a
cohesive data, analytics and analysis strategy.
This aligns with broader trends in the finance industry where
front office teams and risk functions are increasingly investing in
their underlying data infrastructure and advanced technology
capabilities, including the use of sophisticated tools and systems
for real-time monitoring and predictive analytics.
Compliance Maintains its Seat at the Table
Surveillance and compliance teams continue to maintain a
prominent voice in business decisions, with respondents either
strongly agreeing (44.7%) or agreeing (31.3%) that they have a seat
at the table. They are considered an integral component of risk
management, ethical business practices and corporate governance to
maintain and protect brand reputation and trust.
Regulatory-focused spending therefore continues to rise,
although the pace of growth is moderating as firms adjust to the
evolving landscape. More than 40% of firms reported increased
compliance spending this year, consistent with the steady budget
increases observed over the past nine surveys.
There has however been a significant shift in how organizations
allocate their tech budgets, reflecting the move away from
traditional workflow and transaction monitoring to invest more in
advanced analytics.
The full report is available to download here.
About Nasdaq
Nasdaq (Nasdaq: NDAQ) is a global technology company serving
corporate clients, investment managers, banks, brokers, and
exchange operators as they navigate and interact with the global
capital markets and the broader financial system. We aspire to
deliver world-leading platforms that improve the liquidity,
transparency, and integrity of the global economy. Our diverse
offering of data, analytics, software, exchange capabilities, and
client-centric services enables clients to optimize and execute
their business vision with confidence. To learn more about the
company, technology solutions and career opportunities, visit us
on LinkedIn, on X @Nasdaq, or at www.nasdaq.com.
Media ContactsAndy Hughes +44 (0)7443
100896Andrew.Hughes@nasdaq.com
Camille Stafford +1 (234) 934
9513Camille.Stafford@nasdaq.com
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