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Financial Services Needs Compliance Aggregators

Compliance has not kept up with the current dynamic regulatory environment and its multitude of requirements.

The increasing complexity of regulations compounded by the growing volume of data created across financial services firms has resulted in heavier demands on compliance teams serving the industry. Adding to those challenges is a fragmented compliance industry that has inadvertently created redundancies leading to inefficiencies, missed risks and higher costs for many firms. Already charged with the critical role of enforcing regulations and standards, compliance teams don’t need their jobs to be complicated by ineffective and siloed solutions. 

The answer: Compliance aggregators.

Too Many Cooks

The financial services industry has experienced breakneck consolidation in recent years, with more firms offering a broader, more comprehensive range of services. As the traditional lanes of responsibilities become consolidated under the banner of singular brands, compliance providers will need to cater to two disparate groups of clients — the mega-firms seeking workflow and cost efficiencies and the smaller boutique firms that require a comprehensive solution to manage the dynamic regulatory environment and its multitude of requirements.

However, in many ways, compliance has not kept up. Because financial services were historically siloed, especially when considering what entity regulates each service, the compliance industry followed a similar pattern. Simply put, in today’s environment, compliance is a fragmented industry, oftentimes creating disparate solutions to serve niche audiences.

With the consolidation taking place within the marketplace, merging firms may unintentionally introduce risk into their programs — the complexity of multiple platforms and providers that have been Frankensteined together to automate the compliance function all too often creating holes in otherwise comprehensive programs.

For the same reason, we have seen significant consolidation in the financial services space — to drive efficiencies for firms and capital investors and to provide a streamlined service offering to clients — we are now seeing an opportunity to address the industry’s regulatory compliance providers.

After all, fragmented markets don't serve customers well — and when considering the downside risk of forcing compliance teams to use several different programs, solutions and tools to keep on the right side of regulators, firms should demand a better solution. 

A Unified Approach

The industry consolidation, which has impacted countless financial institutions and firms, demands a better approach to compliance based on the consolidation of technology and services. Firms should aim to work with a provider that addresses their needs and provides a uniform approach across all its services benefits, supporting compliance initiatives today, while providing new and innovative solutions for tomorrow’s compliance challenges.  An aggregator partner is best suited to pull those puzzle pieces together — organically growing through strategic product development, as well as through targeted acquisition.

Such a solution gives compliance teams a simplified system, often streamlining data sources and reducing the likelihood of errors and potential risks. Thus, providing the means to meet complex regulatory demands.

The financial services regulatory environment is only becoming more complex, placing additional demands on compliance officers and departments. Quite the uphill battle, primarily when a program relies on multiple tracking and reporting platforms to mix and match its understanding of risk. So, what’s the answer? The compliance industry may be set for consolidation as compliance officers seek to streamline risk management priorities.


Nathan Remmes is Chief Growth Officer of COMPLY, the global market leader of compliance software, consulting and education resources for the financial services sector.

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