How Compliance Software Can Alleviate Regulatory Burden

3rd August 2023

How Compliance Software Can Alleviate Regulatory Burden

In today’s rapidly evolving business landscape, regulatory compliance has become a significant challenge for financial institutions and other regulated industries. The ever-changing and complex regulatory requirements place a heavy burden on organisations, leading to increased costs, resource allocation, and operational inefficiencies. However, a silver lining appears through the rise of compliance software, which serves as an innovative solution to manage the abundance of regulatory requirements. In this blog, we will explore how compliance software is revolutionising the approach to compliance, streamlining and automating processes, and helping to alleviate the regulatory burden in a faster, smarter, safer way.


Regulatory burden refers to the challenges and complexities that businesses face when complying with a plethora of regulations. This burden has intensified due to the continuous introduction of new laws, international standards, heightened scrutiny from regulators and auditing requirements. A recent report from Clyde & Co highlighted how over 50% of MGAs view the increase in regulatory requirements and scrutiny as a barrier to entry in the market. Factors contributing to the regulatory burden are:

1. Proliferation of Regulations

The financial services industry is governed by numerous regulations at local, national, and international levels. These include laws related to anti-money laundering (AML), Know Your Customer (KYC), data privacy, consumer protection, financial stability, due diligence, risk management, and more. Each regulation may have unique reporting, documentation, and compliance requirements, which can be overwhelming for financial institutions to manage. This proliferation of regulations therefore hinders the onboarding of new trading partners, with the red tape surrounding trading, regulatory and legal obligations proving unmanageable and tiresome for companies employing manual processes.

2. Frequent Changes and Updates

Regulatory bodies often amend or introduce new regulations in response to emerging risks, market conditions, or geopolitical developments. The constant evolution of regulations requires financial institutions to continually update their policies, procedures, and internal controls to remain compliant.

3. Heightened Scrutiny

In the aftermath of financial crises and high-profile scandals, regulatory authorities have increased their scrutiny of financial institutions. This heightened oversight necessitates greater documentation and transparency, adding to the regulatory burden. Clyde & Co’s report further emphasises how this level of scrutiny is only expected to increase over the course of 2023, with 9/10 MGAs surveyed in agreement.

4. Data Management and Reporting

Compliance with regulations often involves collecting and managing vast amounts of data, including customer information, financial records, and risk assessments. Financial institutions must maintain accurate and accessible records and submit comprehensive reports to regulatory authorities, which can be resource intensive when having to compile and extract insight from multiple data silos.

5. Increased Compliance Costs

Meeting regulatory requirements demands substantial financial investments, and with increasing regulations comes increasing costs. Financial institutions must allocate resources for specialised staff, compliance technology, and external audits to ensure adherence to regulations. Indeed, BIBA’s 2023 Manifesto report highlighted how regulatory costs for brokers have increased by 40% since 2019. Deloitte further note that compliance based operational expenses for retail and corporate banks have escalated by over 60%, when comparing to pre-financial crisis spending levels. In the latest True Cost of Compliance report from LexisNexis Risk Solutions, UK financial services organisations are collectively spending £34.2 billion on financial crime compliance (FCC) per year. It was also revealed customer due diligence accounted for the largest portion of FCC budgets, rising to 67% since 2020. In short, heightened regulatory costs are consequently minimising profit margins and hindering growth.

6. Operational Inefficiencies

Managing compliance-related tasks can divert time and effort from core business activities, leading to reduced operational efficiency and potentially impacting customer service. Smaller companies may struggle to keep up with the complexity and load of regulatory requirements, whilst also only having access to limited resources. These operational inefficiencies can create a competitive disadvantage and limit the ability to offer innovative solutions. Moreover, manual and time-consuming processes hinder business growth, with people spending too much time on repetitive tasks that can be automated.

The consequences of non-compliance can be severe, resulting in penalties, reputational damage, and potential legal actions. Non-compliance or regulatory breaches can damage a financial institution’s reputation, erode customer trust, and result in loss of business.

By definition, compliance software refers to the ‘software tools an organisation employs to monitor its internal systems and controls, in order to comply with required standards and regulations.’ For regulated business, ensuring adherence to trading, regulatory and legal obligations is cardinal. Businesses failing to comply with regulatory standards risk exposure to fines. In recent years, the advancements in technology have given rise to innovative developments within the compliance software sphere, with modern phenomenon, RegTech, taking charge. In essence, RegTech is a subset of compliance software referring to the fusion of technology and regulatory processes, providing innovative solutions to compliance challenges. RegTech streamlines and enhances the compliance journey for businesses. Its purpose is to simplify the often cumbersome and resource-intensive tasks associated with regulatory adherence.
1. Operational Efficiency

RegTech solutions have the ability to transform operations and regulatory productivity through automating manual tasks, centralising data, reducing the need for human intervention and minimising errors. Time-consuming data collection, verification, and reporting become swift and accurate, freeing up valuable resources for other critical business operations. With automated alerts and updates, RegTech keeps organisations informed about changes in regulations in real-time, ensuring continuous compliance.

These combined functionalities not only transform operational governance and oversight efficiencies, but have a significant impact on businesses’ abilities to accelerate trade, expand trade partner portfolios and ultimately provide faster routes to revenue.

2. Reporting & Management

RegTech excels in regulatory reporting, ensuring accurate and timely submissions. The risk of errors and delays is significantly reduced, which helps organisations maintain an immaculate compliance record. Additionally, RegTech centralises data management, providing a cohesive platform to track, store, and access compliance-related information. This centralisation enhances efficiency and makes data readily available for audits and reporting purposes, providing financial institutions with esteemed credibility in the marketplace.

3. International Compliance

The challenges of meeting global regulatory requirements can be daunting. However, RegTech serves as a reliable ally in navigating this intricate landscape. RegTech solutions help businesses adhere to multiple regulatory regimes without duplicating efforts or resources. By providing a comprehensive approach to compliance, RegTech ensures that organisations maintain their global operations with ease.

4. Cost-Effectiveness

While the initial investment in adopting RegTech solutions may be a new cost, the return on investment is quickly evident. Automation reduces the need for manual labour and minimises the risk of human error. Through improved resource allocation, compliance professionals can prioritise tasks effectively and focus on higher-value projects such as new business opportunities and growing their trade partner portfolios with speed, integrity and efficiency; ultimately leading to better cost management.

Moreover, with reduced errors, RegTech seamlessly mitigates the risk of businesses’ susceptibility to fines and penalties. Through ensuring accurate and reliable data, reporting and analysis, coupled with continual real-time monitoring and risk assessment, in one centralised database, financial institutions can avoid non-compliance incidents by reacting to adversaries instantaneously. This early detection prevents potential breaches that would have a significant financial implication later.


Already organisations and compliance officials are battling with the burdensome challenge of regulatory requirements, but with the mounting pressure from governments and regulatory bodies in the form of both regulation proliferation and scrutiny, many businesses run the risk of non-compliance without a fool proof compliance management system in place. To navigate the regulatory burden effectively, financial institutions must adopt proactive compliance strategies. This involves embracing sophisticated compliance systems like RegTech solutions to leverage automation technology to streamline regulatory processes, management and reporting. RegTech empowers organisations to focus on their core operations while confidently meeting their regulatory obligations. Companies must also foster a pervasive compliance culture across their organisation. By staying on top of regulatory changes and implementing robust compliance measures, financial institutions can mitigate risks and establish a sustainable and trusted presence in the market, through proactively reacting to changes, ensuring exceptional due diligence and setting a reputable precedent for the management of regulatory burden. Ultimately, in today’s complex and ever-changing regulatory world, businesses must find a way to stay ahead of the curve and operate faster, smarter and safer.

To learn more about how RegTech can help serve as a solution to your compliance needs, speak to one of our experts

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Article author:

Zoë Parsons

Zoë Parsons is the Marketing Manager at REG Technologies. With a passion for creativity, she is dedicated to driving the success of REG’s digital presence through innovative strategies and a keen advocate for diversity and inclusion.

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