Financial institutions are grappling with the growing complexity of compliance regulations and the evolving tactics of financial criminals, resulting in global financial crime compliance costs exceeding a staggering $206 billion.
Furthemore, this substantial expenditure is equivalent to over 12% of the world’s research and development (R&D) spending and amounts to approximately $3.33 per month for every working-age individual on the planet. While 71% of professionals in financial crime compliance are leveraging advanced analytics and artificial intelligence (AI) to enhance their data utilization, challenges such as data quality issues, data silos, outdated legacy systems, and internal collaboration gaps contribute to avoidable compliance costs.
The study reveals that financial institutions in the EMEA region bear a more significant financial burden for compliance compared to other regions, with EMEA’s financial crime compliance costs surpassing those of the U.S./Canada by 39.8%. This disparity reflects the increasing complexity of compliance requirements. Enriched payment data emerges as a powerful tool in combating complex financial crimes, with 83% of respondents prioritizing its utilization. This enriched data not only leads to faster processing times and fewer payment rejections but also enhances risk management and the overall customer experience, reducing non-compliance risks and exposure to financial crime.
Despite the challenges posed by intricate regulations and sanctions, 85% of financial institutions globally prioritize enhancing the customer experience. CEOs, vice presidents, and directors in these institutions remain committed to this objective, even as they contend with the growing complexity of financial crime compliance requirements.
One significant focus is on optimizing the efficiency and efficacy of financial crime compliance, particularly concerning payments, as 74% of institutions consider this a critical or high-priority endeavor. Leveraging emerging technologies alongside existing solutions is seen as essential in managing costs while delivering optimal customer outcomes.