2020 has witnessed global markets plunging into chaos and economic forecasts turning drastically uncertain. As firms prepare for whatever the rest of the year might hold, many will be looking to trim costs wherever they can. Yet in one department — Risk and Compliance — costs are continuing to rise.
Why is the cost of compliance rising? Because regulatory compliance continues to become ever more challenging.
The speed of regulatory updates has ratcheted up to a superhuman pace in the last few years. Rule changes have increased 500 percent over the last decade, and banks are now facing 18.5x more changes daily.
To keep up, firms have had to staff up, adding more and more compliance analysts, consultants, and lawyers to their payroll, and thus increasing the cost to comply.
A recent study by CEI estimates that on average firms spend approximately $10,000 per employee on compliance. That means that larger institutions (e.g., global banks, large brokers, etc.) with 20,000+ employees are potentially looking at $200 million in compliance costs per year. Smaller firms like RIAs and broker-dealers may spend less overall, but the regulatory burden can act like a regressive tax, disproportionately eating a larger portion of their bottom line.
And the cost of non-compliance has increased too.
Since 2008, U.S. banks have paid over $243 billion in fines for a swath of compliance failures. While frightening, this number barely represents the full cost of non-compliance, which is also felt in business disruption, productivity loss, and revenue loss that can ripple out for months or even years. In a study by ECGI, reputational losses incurred by firm misconduct were shown to have an even greater negative impact than the fines themselves; on average, stock price reactions were nine times larger than the penalties imposed by regulators.
In this new unstable environment, companies will need a strong compliance operation more than ever. Shackled by financial constraints, many companies will feel that the ability to comply with the law simply isn’t in their budget. This is where Ascent can offer a way forward.
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There’s a smarter — and cheaper — way to comply.
Companies don’t have to choose between following the law and abiding by their budget. Instead, they can look to regulatory technology as a way to do more with less.
In an environment where it is essential to increase efficiencies, Ascent’s AI-powered platform can help companies drastically reduce the amount of time and money spent on identifying their obligations and keeping up with regulatory change.
Powered by our innovative RegulationAI™ technology, Ascent maps regulatory text to your unique business, automatically extracting every obligation and rule change that applies to you. As rule changes are published, your obligations inventory is automatically updated for human review.
Companies can then connect this data to their own internal system or GRC, or manage your obligations within Ascent — linking together crucial steps in pursuit of a fully traceable end-to-end compliance process.
Reduce your compliance costs.
Ascent helps financial institutions save money on compliance in two key ways:
— Ascent reduces the cost to comply. Ascent helps you slash regulatory analysis time from hundreds of hours to mere minutes. Faster and more accurate than humans alone, Ascent drastically reduces the need for additional headcount or expensive outside counsel. More importantly, Ascent empowers existing staff to take on more value-add activities, thereby strengthening the business overall and shifting compliance from a cost-center to a competitive advantage.
— Ascent prevents compliance failures and associated fines and penalties. In a world where a new regulatory update is issued every seven minutes, financial institutions can no longer afford to miss a rule change. By automatically delivering the obligations and rule changes that apply specifically to a business, Ascent helps shore up the compliance program, minimize risk, and avoid fines.
In these uncertain times, you can’t afford to miss a regulatory update.
Maintaining a comprehensive view of the regulatory landscape and a complete and detailed understanding of your changing obligations is more crucial — and more challenging — than ever in today’s environment. By leveraging Ascent’s AI-powered platform, companies can gain more thorough and comprehensive results than manual effort alone would allow for — and can do so at a fraction of the time and cost.
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