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Financial Crime Compliance Costs UK Banks £34.2 Billion, But Are They Getting Value for Money?

A staggering £34.2 billion is the estimated cost of financial crime compliance (FCC) for UK banks and fintechs, according to a latest report from LexisNexis Risk Solutions.

The Cost of Compliance

This figure represents a significant increase of 19% over the past two years, with technology costs making up half of the total amount spent on FCC. Customer due diligence activities consume the largest portion of FCC budgets, rising from 53% to 67% of all costs since 2020.

Fragmented Risk Management Strategies

Nina Kerkez, director of consulting at LexisNexis Risk Solutions, suggests that the issue may lie in fragmented risk management strategies. “Organisations are making well-intentioned investments in automating distinct processes within the compliance workflow, but overall risk management strategies remain extremely fragmented,” she said.

Expectations for Future Costs

The report also reveals that firms expect their annual costs of financial crime compliance to rise by an average of 8% over the next three years. While this may seem like a slower growth rate than previously experienced, it is still concerning for an industry where costs have increased significantly in recent years.

Risk Orchestration Technology

Risk orchestration technology could be the key to maximising investments in FCC further by integrating multiple systems and data sources together in harmony. This reduces inefficiencies and duplication of processes, generating near real-time insight and analysis that is easily interpreted.

The Need for Change

The sector may reach a tipping point if efficiency gains become increasingly hard to come by. As costs continue to rise, it is essential for financial services organisations to re-examine their approaches to FCC and ensure they are getting value for money from their investments.

Read the Full Report

To read more about the True Costs of Compliance, click here to download the full 2023 report: [insert link]