How Compliance Teams Are Tackling the RegTech Surge

Why It Matters

Accelerating regulatory demands force firms to modernize compliance or risk costly breaches, while the surge in AI‑enabled RegTech promises to reshape risk management investments across the industry.

Key Takeaways

• 58% of firms still at basic, manual compliance maturity
• Advanced automation expected to rise to 35% in 12 months
• 74% plan new compliance tech investments within a year
• AI seen as transformational by 46%; 87% see some AI value
• Tier 1 banks face biggest challenge operationalizing regulatory changes

Pulse Analysis

Financial institutions are grappling with an unprecedented pace of regulatory change, a reality underscored by AscentAI’s latest survey. More than half of respondents admit their compliance functions remain entrenched in manual, spreadsheet‑heavy workflows, a situation that hampers speed and accuracy. The data reveals a stark maturity gap: only 16% have achieved fully automated, integrated compliance operations, while the remaining 58% linger at a "Basic" or "Dependent" level. This lag not only inflates operational costs but also heightens exposure to regulatory penalties, especially as new rules surface daily across North America and Europe.

The survey also uncovers divergent challenges based on geography and institution size. Large Tier 1 banks, despite having robust monitoring capabilities, struggle to cascade regulatory updates across siloed divisions, making operationalization the toughest hurdle. Conversely, regional banks and broker‑dealers find tracking regulator announcements to be their primary pain point, reflecting limited resources for continuous surveillance. These nuances highlight that a one‑size‑fits‑all RegTech solution is unlikely to succeed; vendors must tailor offerings to address both data integration and change‑management complexities specific to each segment.

Artificial intelligence emerges as a double‑edged sword. While 46% of compliance professionals label AI as transformational, another 41% remain skeptical of current market solutions, citing underperformance. Nonetheless, optimism prevails—87% see some value in AI, and 74% intend to invest in new compliance technology within the next twelve months. FinTechs lead the charge, with 90% planning spend, followed closely by Tier 1 banks at 87%. This investment wave signals a shift toward AI‑powered RegTech, setting the stage for a more automated, data‑driven compliance landscape that could redefine risk management practices industry‑wide.