Feb 06, 2023

The following blog post is one in a series of Cutter 2023 Trends that provide insights into industry challenges and considerations for our clients and member firms in 2023 and beyond.

To execute their mission to protect the investing public against fraud, manipulation, and misconduct, global regulators continue to focus on high fiduciary standards and accountability, placing the client first, and truth in marketing. The US Securities and Exchange Commission (SEC) recently published its strategic plan for the next four years, which includes the regulator’s goal of modernizing its technology so it can carry out its mission in a cost-effective, secure, and resilient manner. As regulators work toward modernizing their technology, is your firm ready to respond?

Although compliance teams historically have not used technology in a big way, Chief Compliance Officers (CCOs) must now look to leverage new technologies that automate many compliance processes and leverage AI to keep pace with the sheer volume of data today’s firms must review. CCOs also need to consider using managed services to help their firms augment staff and keep pace with our changing industry. To address these needs, vendors have extended into traditional areas of compliance such as regulatory reporting and marketing reviews. Because investment management firms should not expect any slowdown in new regulations in 2023, compliance teams must arm themselves with the right modern technology and proper resources.

In 2023 and beyond, compliance teams will need to explore opportunities for transformation that leverage new staff, technology, and managed services ─ or a combination of all three. The stakes are simply too high not to consider every option. We expect this transformation to affect many areas of compliance, including regulatory reporting, electronic communications surveillance, conflict of interest detection, marketing compliance, and validating that investment guidelines translate into accurately coded compliance rules.

To speak with a Cutter analyst or consultant about this trend, contact us at [email protected]. For more Cutter 2023 Trends, see 2023 Trend: Investing in Modern Technologies Unleashes the Power of Data and 2023 Trend: Supporting the Client Through Data and Digitization.