71% of financial services managers see regulatory compliance as top challenge, survey finds.
Regulatory compliance ranks among the top three business challenges for 71% of senior managers in financial services, according to new research from Auxilion and HPE.
The study, conducted by Censuswide among 200 senior managers in Ireland’s financial services sector, revealed significant concerns about meeting current and future regulatory requirements.
“There are no loopholes or shortcuts when it comes to addressing governance and compliance”
Nearly a third (29%) of organisations admit they are not ready to handle stricter regulations over the next five years, while 25% lack confidence in their ability to comply with Corporate Sustainability Reporting Directive (CSRD) requirements.
AI regulation emerged as another area of concern, with 26% of respondents believing current regulations in the financial industry are insufficient. Paradoxically, two-thirds (66%) feel existing regulations are actually inhibiting AI adoption.
ESG now matters in finance decisions
The research also highlighted the growing importance of Environmental, Social & Governance (ESG) considerations.
Two-thirds of managers believe ESG positively impacts financial performance, and 60% recognise that companies with strong ethical practices face fewer regulatory fines. Nearly three-quarters (73%) report that ESG is a priority for their customers.
“There are no loopholes or shortcuts when it comes to addressing governance and compliance,” said Eleanor Dempsey, director of Strategy, Innovation & Transformation at Auxilion.
“Companies – especially those in highly regulated sectors including financial services – must step up their strategies and investments in this area. As well as training people, that means deploying technologies that support ESG efforts.”
The primary drivers for ESG adoption include investor or board demand (49%), reputation and branding (48%), risk mitigation (44%), customer priorities (39%), and employee satisfaction (39%). This focus is reflected in training practices, with 69% of financial services managers having received ESG and sustainability training.
Technology plays a crucial role in addressing both compliance and sustainability challenges. Seventy-three percent agree that IT is important for achieving ESG goals, with an equal percentage currently using green technologies.
Looking ahead, 70% believe their organization should increase spending on compliance risk, governance and management, with 72% planning to boost IT managed services investment in the next year.
However, regulatory uncertainty continues to create challenges, with 69% reporting that current or upcoming regulatory changes are impacting their IT service management investment plans. Additionally, nearly a quarter (23%) feel the market doesn’t adequately meet their organization’s managed services needs.
“Failing to meet regulatory requirements or embracing ESG not only leaves organisations at risk of financial and reputational repercussions, but it could also have a negative impact on investor and customer relationships,” Dempsey warned. “In turn, the performance, growth and future of their business could be in jeopardy.”
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