Three Mid-Year Takeaways for Compliance Officers

Compliance officer technology

In its first six months, 2018 has proven to be a time of innovation and change for both fintech and regtech. Compliance officers and others have had to strike a balance between embracing new technology and strategic advice so clients are informed. Only in this way can they take the measured risks needed to support innovation. Though many trends affecting the industry are worth keeping an eye on, three stand above the rest.

1. It’s Still About Conduct

Words like cryptocurrency or blockchain were unknown ideas only a few years ago. Now, fortunes may be won and lost on their successes and failures. SEC Chair Clayton has taken strides in the past year to cement his organization’s understanding and position on the future of these technologies – so much so that the SEC just appointed Valerie Szczepanik as its first ‘Crypto Czar.’ Szczepanik affirms that the SEC does not intend to rein in technology, but instead to continue to regulate conduct.


2. Regtech is Growing. Be Curious and Get up to Speed.

The momentum we’ve seen in the past few decades has been an amazing testament to how quickly trends evolve today – and they are only getting faster. It was not so long ago that the smartest computer in the world could barely win a game of chess. Currently, we can fit the world in our pockets, and we trust machines to make the most sensitive trades on Wall Street. Though the genie is out of the bottle, so to speak, there will always be a human element to all of this.

The automation afforded by innovations such as blockchain or AI is certainly improving efficiencies for COs. Beyond simplified surveillance, there are benefits to gain within compliance program including workflow, agility, speed, integration, and analytics. For a great overview of this topic, I’d recommend “Regtech is the new Fintech.”


3. Technology Cannot Replace Sound Judgment.

Experienced compliance advice is needed more than ever.  As companies innovate with new products, services, and business models, experienced compliance officers are crucial to their success. Without them, business may grow too quickly. In the excitement of rapid growth, compliance and governance mistakes can arise.

Betterment is a useful case in point. This June, the industry leader and freshman fintech robo advisor was hit with both corporate and executive fines for what Finra cited as window dressing.

This spring, Chief Justice Roberts delivered a commencement address to his daughter’s high school class. In his remarks, he lamented about the difficulty in striking a balance between the power of technology and human attributes like curiosity and analytical thinking –  perspectives and skills that are key to the success of compliance officers, lawyers, and other risk professionals. Chief Justice Roberts offered this warning: “beware of the robots.” He was not referring to the robots of some remote future, but to the machines with which we interact every single day.

Chief Justice Roberts did not paint a dystopian picture of the future; he simply cautioned that technology does not just influence the decisions we make, but how we come to make decisions.

Yes, tech is key to our innovation. We can’t innovate, though, if we let the tech steer us away from our own analytical development. Tech is a tool  – use it that way and remember if you understand the technology you will be better positioned to advise on risks and internal control issues. No matter how advanced the tech innovation, planning, strategy and other analytical skills will be needed.


To learn more about how you can innovate with compliance, contact my office today. If you would like to read about my philosophy and how to support business growth so there is measured and informed risk-taking, here’s a look inside my book.