US and UK Banks Feeling Unprepared for Regulatory Change

Most Banks Across the US and UK Agree Their Financial Control Processes are not Robust Enough to Accommodate More Regulatory Change, Finds Autorek

Most financial institutions feel they are poorly equipped to accommodate further regulatory change, according to the results of new research carried out by AutoRek.

The majority (71%) of banks across the US and UK agree their financial control processes are not robust or flexible enough to accommodate more regulatory change or scrutiny. 

Presented in a report focused on the state of banking in 2024, the findings come at a time when financial institutions are having to consider the impending implementation of numerous regulatory changes, including EMIR Refit and revisions to MiFID II.

“Our latest banking industry survey shows that firms are working hard to modernise and adapt to growing competition and cost pressures, but many are still beset by inefficiencies,” comments Murray Campbell, Regulatory Consultant at AutoRek.

“Optimising core back and middle-office functions must be a top priority for banks to streamline operations, get in control of their data and achieve regulatory compliance. We look forward to completing the survey in 2025 to see how respondents have progressed." 

Data quality a concern for banks

In carrying out their study, researchers from Autorek spoke to 500 professionals representing banks in the US and UK about their digitisation objectives, data challenges, plans for back-office optimisation and approaches to financial controls.

Aside from issues relating to financial control processes, institutions clearly have concerns surrounding the quality of their data, particularly with regards to meeting regulatory reporting requirements. 

A considerable 70% of respondents agree their data lacks the transparency and flexibility to be used for regulatory reporting, while 73% struggle to receive all the data they require to complete internal and external audits – a concerning revelation given auditing season is fast approaching.

US Financial Institutions are Feeling Unprepared for Regulatory Change

Moreover, despite this perceived lack of flexibility in both data and financial control processes, the majority of firms still rely on outdated processes across their financial operations. More than three-quarters (78%) of respondents believe their organisation is too reliant on manual tasks and spreadsheets to perform the reconciliation control process. 

The largest hurdle firms said they were facing when delivering on digitisation initiatives is integration challenges, which refers to the problems that arise when companies look to harmonise disparate data systems and processes.

Given the above, it is somewhat unsurprising that many firms are reportedly looking to invest in cloud infrastructure (29%), process automation (30%) and reporting solutions (26%) to streamline back-office operations over the next 12 to 18 months.

Read the full report – Banking in 2024: Digitisation, data and the back-office

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