Regulations surrounding financial services, banking, and general finance activities are expanding on a global basis. More governments are demanding greater transparency of information by imposing stringent requirements and more investor protection frameworks. The regulatory environment on a global scale is also becoming exponentially more complex, which is gaining the attention of more C-suites and boards.
At the same time, digitization of the financial services industry is occurring at a lightening-speed pace. Artificial intelligence now drives the way leading firms provide everything from customer service to investment advice. Digital labor, or robotic process automation, is helping firms automate things they couldn’t do before. As a result many legal functions, tasked with managing the complex myriad of financerelated compliance requirements, are asking whether they themselves should take better advantage of automation to enhance efficiency and value.
Other megatrends are also making an impact. The prolonged low interest rate environment is prompting many FS companies to look at cost containment as one of the keys to survival. FS (and non-FS companies alike) are also seeking top line growth. The resulting business transactions are requiring in-depth banking and finance expertise to minimize compliance risks and employ creative approaches to barriers and challenges.
Moreover, compliance obligations in the banking and finance area are getting broader in scope, applying to an expanding number of activities. Multinational enterprises that are not in the FS industry are increasingly having to address and manage these compliance obligations. As an example, activities such as cash pooling arrangements or commodities trading in other departments could cause banking and other regulatory requirements to apply.
In-house legal functions may be ill-prepared to address these unique and fast-arriving demands, placing burdens on companies that often have limited resources and expertise both domestically and overseas. Legal departments are seeking ways to satisfy these compliance responsibilities while also ensuring that their resources are focused on issues and projects that have a measureable value contribution to the bottom line.