Leo Patching is CEO of Kompliant, helping financial firms streamline compliance and fraud detection with AI-powered workflows.
In today’s financial landscape, compliance is a double-edged sword. On one side, it represents an escalating cost center, an obligation to meet increasingly complex regulations under growing operational pressure. A 2023 study by LexisNexis showed that 98% of financial institutions now report rising financial crime compliance costs, creating economic and operational pressures.
On the other hand, compliance holds the untapped potential to become one of the most powerful strategic assets in an organization’s tool kit.
Yet, despite recognition of its importance, many financial leaders still treat compliance as an afterthought, rather than the performance engine it can be.
How Companies Are Approaching Compliance
This contradiction came into sharp focus in a recent national survey of 500 senior financial industry executives conducted by Equifax in partnership with my organization, Kompliant. The data revealed a near-universal adoption of compliance software, particularly in areas like data privacy and risk assessment.
This aligns with broader industry findings: According to the 2023 Thomson Reuters Risk & Compliance Survey, 70% of corporate risk and compliance professionals said there has been a shift away from check-the-box compliance toward more strategic, integrated approaches over the previous two to three years.
But despite this widespread usage, we found organizations typically allocate less than one-third (30%) of their technology budgets to compliance and risk management. It’s a classic example of underinvestment in a critical capability.
The real issue isn’t the lack of technology—it’s how organizations think about it. Often compliance systems are bolted on to existing processes, addressed sporadically and evaluated primarily in terms of their ability to prevent penalties. What this misses is the transformative potential of compliance when integrated holistically and leveraged intelligently.
Compliance can serve as more than a shield. It’s a lens through which companies can build customer trust and streamline operations. In a digital economy where trust is the new currency, companies that demonstrate transparent, secure and continuous risk oversight can differentiate themselves.
The Importance Of Continuous Compliance
Consider the way many financial institutions still operate: Risk assessments and monitoring are performed periodically, monthly or quarterly at best. Our survey found that only 40% of firms conduct daily compliance checks, and fewer still assess risk on a continuous basis. In a world where threats emerge by the minute and regulations evolve constantly, this cadence is inadequate.
Meanwhile, leaders who have embraced continuous compliance are reaping tangible benefits. They reduce fraud, accelerate onboarding, lower operational costs and increase customer satisfaction. They build resilience into the very fabric of their businesses.
Other research reinforces this gap, and the upside of addressing it. According to PwC’s Global Risk Survey 2023, 40% of business and risk leaders said their organization had improved its approach to risk to achieve more robust compliance with regulatory standards over the past 12 months. Among the top-performing 5% of companies, that number surged to 81%. The takeaway: Leaders aren’t just reacting to compliance pressures, they’re turning risk management into a source of strategic advantage.
Leading From The Top
Strategic adoption of compliance technology is increasingly being led from the top. More than half of the surveyed organizations said their CEO is directly involved in compliance tech decisions, signaling a shift in how these investments are viewed. No longer siloed within legal or risk departments, compliance is moving into the boardroom, and with good reason.
The business case is compelling. Advanced technologies are transforming what’s possible. Tools that offer real-time risk monitoring, dynamic regulatory reporting and automated decisioning allow organizations to scale efficiently without compromising security. In fact, firms that have deployed these technologies often experience gains in underwriting efficiency and customer onboarding speed, key drivers of revenue growth in today’s environment.
The Challenges
However, one of the most significant barriers remains perception. We found 68% of survey respondents expressed concern about the security of emerging compliance technologies. This hesitation, while understandable, highlights a broader risk-averse mindset that can hinder innovation.
It’s essential for leadership teams to engage in due diligence, but equally important to adopt a long-term vision: Security and innovation are not mutually exclusive. With the right governance, they are mutually reinforcing.
For organizations new to compliance platforms, early-stage challenges typically fall into a few categories: integration complexity, unclear ownership and resistance from internal teams. Many firms underestimate the effort required to unify fragmented data sources or legacy systems into a centralized compliance workflow. Others begin implementation without fully defining who owns the process—legal, compliance, IT or operations—leading to unclear accountability and delayed outcomes.
Another common misstep is treating compliance as a static IT deployment rather than a dynamic, cross-functional capability. Platforms need to evolve alongside regulatory change, business growth and emerging risks. This requires collaboration across teams, investment in training and a willingness to revisit assumptions regularly.
To overcome these challenges, companies should start by creating a clear map of their current-state compliance processes, including any gaps and redundancies. Align stakeholders early, assign executive sponsorship and choose platforms that are configurable—not just customizable—so they can scale with evolving needs. Importantly, prioritize vendors who emphasize transparency, auditability and robust security controls, helping shift the conversation from fear to confidence.
A New Approach
A new framework for thinking about compliance is needed, one that views it not as an annual box to check but as a continuous, value-generating capability. Financial institutions must shift from a reactive to a proactive approach, from a fragmented to an integrated one, and from compliance as an obligation to compliance as an advantage.
The payoff can be significant. Organizations that make this shift could find themselves better prepared for regulatory scrutiny, more agile in adapting to market changes and more competitive in attracting and retaining customers. In this environment, compliance excellence becomes a signal to the market: This is a business you can trust.
As technology reshapes finance, the complexity of managing compliance will continue to grow. But so, too, will the opportunity.
Risk management doesn’t have to be a tax on innovation, it can be the very foundation of it. The key lies in reimagining compliance not as a constraint, but as a tool for growth.
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