Tech risks dominate finance compliance, eflow survey finds

A recent survey conducted by eflow Global reveals that a significant majority of global regulatory leaders in the finance industry see tech-driven risks as a primary concern for compliance in the upcoming year.

eflow Global surveyed 300 senior executives in finance from the UK, US, Europe, and APAC, finding that 64% believe the accelerated use of technologies, including artificial intelligence, could pose the greatest risk to compliance.

The survey's results also underscore the broader set of challenges faced by financial firms amid a volatile global environment. A total of 58% of respondents pointed to economic instability as a major factor likely to cause compliance challenges, with this concern rising to 63% among UK-based regulatory professionals.

Geopolitical instability was also noted as a significant challenge, with one in four executives indicating it as a rising concern. Furthermore, 47% of participants identified the increasingly complex regulatory environment as a substantial obstacle to maintaining compliance.

Ben Parker, CEO of eflow Global, commented on the findings, advising firms to "proceed with caution and be mindful of inaccuracies". Parker emphasised the importance of considering the risks associated with AI, particularly in areas such as data privacy and security. "Implementing AI without proper testing and validation can lead to unintended consequences, especially in highly regulated sectors like finance," he stated.

Parker elaborated on the balanced approach needed, noting that "human expertise remains vital" and that AI should serve to complement and enhance human decision-making. This balance allows experts to focus on strategic oversight while automation handles repetitive tasks. "This collaboration between AI and human professionals is critical to building efficient and compliant systems," Parker added.

Jonathan Dixon, Head of Surveillance at eflow Global, provided additional insights into the transformation AI brings to trade surveillance. He highlighted AI's potential for enabling real-time monitoring and predictive analytics that can anticipate risks before they occur, as well as its role in improving transaction traceability and regulatory process efficiency. However, he cautioned against over-reliance on AI, describing it as "like flying blind" without human oversight. "No matter how advanced it is, a flawed algorithm or biased dataset can create blind spots that can create significant regulatory and reputational risks for firms," Dixon warned.

The insights are part of eflow Global's forthcoming Global Trends in Market Abuse and Trade Surveillance 2025 Report, set to be launched in March 2025. The report will provide a comprehensive analysis of the challenges facing regulated firms around the world.