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How to Handle Soaring Compliance Costs

by Jim D’Arezzo

To be compliant, financial firms must provide timely, accurate, and detailed data about the transactions they manage. How can financial services organizations address rising costs associated with compliance?


In the financial services industry, regulatory compliance is the “constant companion” that never leaves your side. And this is one high maintenance companion. Regulatory compliance requirements rarely, if ever diminish, and the costs are already huge. 

That’s why nine out of 10 financial services executives expect continued cost increases in their compliance departments according to a global survey by Accenture of 150 compliance officers at banking, insurance, and capital markets firms across 13 countries in the Americas, Europe, and Asia-Pacific.

According to the 2017 Accenture survey, nearly half of the executives are predicting the continuation of higher spending on compliance and expect increases of 10 percent to 20 percent. Nearly one in five said they were expecting increases of more than 20 percent. Nearly a quarter of surveyed firms reported spending more than 5 percent of net income on compliance.

How can a financial executive address these soaring compliance costs? Steve Culp, head of Accenture’s Finance and Risk practice, said compliance managers “should be thinking in terms of advanced technologies that can bring stable, cost-effective solutions that will enhance the function’s performance.”

Certainly, technology is critical to compliance success, but this industry already spends more than any other, according to the Gartner Group. The challenge is to maintain the level of computing performance in order to comply with regulations without swamping your systems. Should we all just bite the bullet and throw more money toward upgrading our IT infrastructure by adding expensive new hardware and software? No problem if you have an unlimited checkbook, although I have met few executives who have that luxury. Keep in mind that a “forklift upgrade” of hardware, besides the extra cost of the boxes, entails additional migration costs, compatibility testing, training, downtime, and other challenges. 

Alternatively, you can look at other steps to increase the performance of your existing data centers or cloud-based environments that will give you the needed performance headroom to meet compliance requirements.

Increasing the network bandwidth of your environment is a prudent step that can be very cost-effective as there are usually little to no migration costs, little to no “rip and replace” hardware actions and it can be done quickly. Another move is to upgrade your data storage back end to faster technology, such as all flash storage arrays or hybrid arrays. This is more expensive and will add migration and upgrade costs, but it is highly targeted. A third option is to employ an all-software solution to improve performance, especially with heavy duty applications that run on SQL servers. Software to reduce I/O, the input-output computing actions that can bottleneck performance, can improve that performance by 50 percent to as much as 2-3X or more depending on the workloads – all without additional hardware or migration costs.

The bottom line is that compliance costs are rising, but it doesn’t have to eat you alive. There are options to consider when addressing the added costs that can improve performance while saving you money.

Jim D’Arezzo is the CEO of Condusiv Technologies.