Let’s explore statistics that illustrate both the challenges and benefits of compliance in the financial sector:
Compliance Challenges in the Financial Sector:
Cost of Compliance:
The overall cost of regulatory compliance in the banking sector can be substantial. According to Thomson Reuters, annual compliance costs for financial institutions run into several hundred billion dollars.
Growing Regulatory Complexity:
The complexity of regulations is increasing. On average, financial institutions must comply with more than 200 new or updated regulations every working day, according to a Thomson Reuters report.
Impact on small and medium-sized banks:
For smaller banks, compliance costs can represent a disproportionate share of their resources. A McKinsey study showed that smaller banks spend up to three times more proportionally on compliance than larger banks.
The rapid evolution of technology and the use of new communication channels increase the challenges for financial institutions in maintaining compliance. KPMG reports that 48% of financial organizations believe that technology is one of the biggest barriers to effective compliance.
Benefits of Compliance in the Financial Sector:
Building Trust and Reputation:
Effective compliance contributes to building customer trust and enhances the reputation of the financial institution. According to Deloitte, 62% of consumers are more likely to do business with companies that protect and manage their data responsibly.
Reducing Financial and Operational Risks:
Proper compliance helps reduce financial and operational risks, resulting in cost savings. An IBM study found that the direct and indirect costs of a data breach for an organization can be significantly reduced with investments in compliance.
Access to Markets and Strategic Partnerships:
Effective compliance can facilitate access to new markets and the establishment of strategic partnerships. PwC indicates that companies that demonstrate a clear commitment to compliance are more likely to attract investors and business partners.
Improved Operational Efficiency:
Well-managed compliance can improve operational efficiency and the quality of internal processes. According to Thomson Reuters, organizations that invest in compliance technologies can save up to 40% on compliance costs.
These statistics underscore the substantial challenges faced by the financial sector in relation to compliance, but they also highlight the tangible benefits that can be achieved through effective compliance practices.
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Posted at: 20230920