Compliance has been a dirty word in financial services for several years now. But lately the regulatory burden seems to be driving many in the industry into the realms of nervous breakdown, with 87% of global banking CEOs citing over-regulation as an outright threat to growth. (PWC’s 19th Annual Global CEO Survey: Banking and Capital Markets).

The reputation of regulation has sunk so low that just last summer the Financial Conduct Authority (FCA) asked financial firms to submit evidence on whether it was a barrier to innovation in digital and mobile solutions. It comes to something when the regulator itself is asking whether there’s too much regulation.

In its official summary of the feedback it received – published in March – the FCA said:

“In their responses, most stakeholders sought clarity over regulatory definitions. It was also clear from the responses to the Call for Input that, while many innovative digital and mobile solutions already exist with stakeholders eager to use them and provide them to consumers, there are a number of perceived barriers that are preventing greater use of all the available technology.” (FS16/2: Feedback Statement on Call for Input - regulatory barriers to innovation in digital and mobile solutions, Financial Conduct Authority, March 2016)

OK, compliance is a pain in the neck. It’s difficult to keep on top of, and it’s not always clear how to apply the rules in the real world. But still, are financial firms really so eager to innovate? Or is that just what they told the FCA?

Are you using compliance as an excuse?

Anecdotally, I know of several cases where financial firms have shied away from making new technology investments because of compliance concerns. But all too often compliance is not a genuine barrier to adopting new technology; it’s a convenient excuse.

This is a big deal. Financial companies that fall behind the digital pack risk reputational damage, lost revenues, difficulty attracting and retaining skilled staff, and higher operating costs. Not to mention potential fines when things go awry with customer data. And we’ve all seen what happens when banks suffer “IT problems” from outdated technology.

Just look at the media storm when RBS was forced to admit that an IT glitch had caused payments to 600,000 customers to go missing last June. (RBS says IT problems fixed, Guardian) Or when HSBC suffered an online service outage lasting days at the beginning of this year. (HSBC website down again, City AM) Both experienced reputational damage and customer churn – and these are two of the biggest banks in the world.

Compliance doesn’t have to be a barrier

The lesson is obvious. You can’t afford to delay implementing new technology just because you’re worried about compliance. Your customers and employees will leave you. Besides, what are you waiting for – all regulation to be abolished? Not going to happen.

So here’s what you do instead: you find technology companies you can trust to partner with. More and more providers already build with compliance in mind or have products that ensure compliance needs are met for clients in regulated industries with highly sensitive business data.

Here are a few tough questions to ask technology firms:

1. Do they know the financial industry
2. Do they have a track record of working with other firms in the financial sector
3. Do they have any case studies, use cases, testimonials or references for you
4. What data security features or partnerships do they have
5. What FinServ or compliance experience do their employees have? Is it specific to your requirements
6. How flexible is the data management of the technology in terms of meeting compliance regulations e.g. data archiving, maintaining data integrity etc.
7. Where is data stored? How physically and digitally secure is that storage and in fact, the data transfer mechanism
8. What disaster recovery processes and safeguards do they have in place
9. How stringent is user authorization and data access control

Do your due diligence, ask difficult questions and compliance ceases to be an excuse.

Instead, it becomes a criterion for assessing the industry expertise of potential technology solutions and digital tools. And the more industry expertise your technology partner has, the more likely they are to know how to implement solutions that will work in Financial Services and improve your bottom line.

Now, isn’t that a powerful reason to speed up technology adoption?