The ‘compliance transformation’ is coming

Although the level of compliance technology and automation varies from industry to industry, and within industries by organization size and cultural willingness, these days, in general, I would characterize the labor split between people and machines at an even 50/50, with the trend clearly toward increasing the amount performed by machines.

I am fortunate to work with businesses in a variety of industries, such as financial services (where I worked most of my career), technology giants, established software companies, start-ups (mostly in FinTechs and RegTech, including Artificial Intelligence), and in the fascinating world of blockchain and cryptoassets. Most organizations with which I work show incredible potential for optimizing compliance in the coming years.

I see the current state as full of promise, although not without challenges and frustrations rooted primarily in data management (too much data in too many systems, many of which do not connect well) and inconsistent practices (e.g., this group has it fully automated, while that group does most things manually). Many of these pain points will take some time to resolve, but they are completely fixable and the trend—which I call “Compliance Transformation”—favors streamlining, systems rationalization, and optimization, with a heavy reliance on technology.

Preparing for the future

The role of technology is indisputably expanding into all aspects of business operations, including compliance. Many compliance officers, especially senior-level and experienced ones, do not have a background in technology. I counsel them to think of our current moment of compliance transformation in holistic terms. No, you do not need to return to college and major in computer science. Instead, understand what these tools can do for you and your function.

To help provide context, I ask my clients if they really know—and I mean really, really know—how the internet works: Can they tell me what TCP/IP, HTTP, FTP, URI (and many other initials) mean, what they do, and how they help make the internet work? None of them can, but when I ask them to describe how they use the internet in their compliance program, they state clearly the benefits of being able to find, store, send, and share information almost instantaneously with their entire organization even if they have offices scattered around the globe.

By analogy, you need not be able to write code and design algorithms to succeed in the future. Take an online course in any of the relevant technologies—some are very low cost (hello, MOOCs like Udemy) or even free (thank you, YouTube)—and learn what they do. Talk with people in tech who really do know what they do. Call or get together with a fellow compliance professional who is already using some of these technologies. As someone in his early 50s who just finished two technology certificate programs at MIT, I promise you it is never too late to start.

The compliance officer of the future is a cyborg

All of my clients want to know where we are going in the compliance profession. What will we look like in 3, 5, or 10 years? How should we think about recruiting? What skills should we acquire? Some of the answers to these questions have been covered above. The compliance officer of the future will need to continue with the same foundational requirements for the job, namely:

• Strong and deep knowledge of the regulatory environment in which the business operates, and of the business itself;
• Demonstrable managerial skills regarding people, processes, operations, and budgets; and
• Effective communication and relationship-building skills in all forums.

The compliance officer of the future, however, must also:

• Be extraordinarily adaptive, energized by rapid change, and extremely flexible. The world of commerce is changing far too fast for CCOs to lack these qualities.
• Get or remain tech-savvy. As mentioned above, you neither need to become a programmer nor need recruit only computer scientists; you will soon, however, want these skills on your team, and you must make the effort to get familiar with the current and emerging technologies that can advance, or even disrupt, your function.

Compliance officers need not fear technology; in fact, they are wise to embrace it. The technology-enabled compliance function shines a bright light on the value compliance officers bring to their organizations. But make no mistake: While robots are not coming to take your job, we are at an inflection point in which compliance professionals must reinvent themselves and their function. The strongest and most successful compliance officers of the future will be a powerful collaboration of human and machine—a true cyborg.

Guest contributor Anthony Dell is a compliance futurist and the founder of Compliance By Design LLC, a boutique consultancy specializing in “compliance transformation.”