How will automation change the compliance function of the future?

28 January 2020

As the use of machine learning and robotics in financial services evolves, it raises a fundamental question about what the future holds for the compliance function.

Against a backdrop of cost pressures and a changing regulatory landscape, many organisations are looking to automate manual activities. But could the compliance function ever become fully-automated?

The high pace of regulatory change following the financial crisis saw the size of compliance functions increase significantly as they brought in the skilled staff needed to ensure compliance with each new piece of regulation. But as the pace of regulatory change has slowed somewhat, we’re seeing regulators increase their focus on the quality of compliance and management of compliance risk, rather than simply assessing whether a business is compliant with a piece of regulation.

As a result, and given cost pressures, businesses are looking to make a number of changes. They are looking to technology and data, with robotics and artificial intelligence opening up the possibility of automating activities carried out by compliance specialists. These include activities such as dynamically mapping obligations to the policy and risk frameworks, tracking and assessing changes to regulation, and providing business-aligned compliance advice.

In addition, organisations are exploring ideas such as integrating compliance with areas of non-financial risk and consolidating teams and processes introduced to meet certain regulatory requirements.

These changes are likely to have major implications for how the compliance function operates, and for the skills and expertise required. So, what’s a realistic vision for the future?

I believe automation will never entirely replace the expertise of compliance officers, but we should certainly expect the automation of more manual compliance activities to be taken as far as possible. That will free up skilled compliance officers to spend more time supporting the business.

As compliance moves towards automation, the skills and capabilities of compliance professionals will evolve. Tech and data skills will become more important, to ensure the business gets the best out of newly automated solutions, as will knowledge of innovative products and services, such as crypto assets and new forms of algorithmic trading.

Added to the mix are questions about regulation post-Brexit, the possibility of the UK moving further towards an outcomes-based approach, and what that would mean for the automation of compliance functions.

A fully-automated compliance model may not be on the horizon any time soon, but the compliance function of the future certainly looks different, and now’s the time for businesses to ensure they can adapt.


To find out more about this topic, please listen to this episode of our Risk & Regulation Rundown podcast, where we discuss transforming compliance functions and the regulation of artificial intelligence.

Paul Atkinson | FSRR Compliance Transformation Leader, PwC United Kingdom
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