Global spending among banks on compliance alone reached almost $100 billion in 2016, growing from 15% to 25% annually over the past four years according to new research.
A report by research and consultancy firm, Opimas, found regulatory spending on talent and consulting has increased due to many banks inability to automated processes.
“Banks have been forced to hire hundreds and even thousands of compliance and risk professionals to fulfil their regulatory obligations pertaining to data management, activity monitoring, transaction reporting and such,” the report said.
On top of this, banks often employ external consultants to ‘patch up’ areas of the organisation that are at risk of being incompliant with regulations.
By 2020, spending on regulatory technology - better known as RegTech – is also expected to reach $80 billion as spending on compliance falls dramatically.
“This [compliance] spending increase will begin to plateau in 2020 as banks learn how to automate new regulations and improve their existing IT capabilities with respect to compliance and control,” Opimas explained.
The report predicted data management, risk management tools and regulatory reporting and compliance tools will account for more than 90% of spending on RegTech.