The pace of regulatory change shows no sign of slowing. Regulators around the world continue to refine and tighten rules to prevent market abuse, protect consumers and minimise the risk of another major crash. While satisfying the obligations of new regulation can seem like a constraint on the business, it can also work in quite the opposite way.
It can be easy to see compliance simply as a series of obligations that must be met, but the visionary firms that lead the industry often use the clarity of regulation to transform operations and open new opportunities. Kelvin Dickenson, Chief Product Officer at StarCompliance explained, “Regulation can be one of the strongest catalysts for innovation when it provides clarity and especially when it has been developed with industry consultation.”
When regulations provide companies with clear guidelines, it can empower them to develop new products and services. Dickenson added, “At StarCompliance (Star), we often see that when clients have confidence in what’s expected, they push forward on growth opportunities. Regulation, when it provides clarity doesn’t slow progress; it accelerates it.”
Regulations can fail at fostering innovation if regulators neglect to collaborate meaningfully with the market. Regulators that include the industry early in the development of new legislation, are going to be better placed to foster growth. With communication lines between the two, Dickenson believes finalised rules will, “not only protect the integrity of markets, but they are practicable and scale to the way financial services firms develop and deliver products. When firms understand the outcomes, regulators want to achieve, they can design new technologies and processes that meet those standards in smarter, more efficient ways.”
Firms that embed regulatory foresight into their innovation processes could gain an advantage in areas such as speed and resilience, Dickenson noted. By anticipating change and aligning processes and solutions around future expectations, firms can minimise disruption and get a first-mover advantage. A proactive mentality also helps put teams on the front foot, rather than fighting to juggle deadlines.
“At Star, we help clients do this by turning regulatory insight into action through configurable systems, automated rules, and real-time analytics that enable compliance to guide innovation, not restrict it,” Dickenson said.
Pitfalls with compliance change management
Despite their ability to nurture innovation, the growing complexity of the regulatory landscape is a difficult challenge for firms. Findings from KPMG claim that 43% of chief ethics and compliance officers see addressing new regulations as their biggest challenge. While the number of regulatory updates relevant to a bank differs depending on numerous factors, a report from Thomson Reuters back in 2016 estimated the finance sector was averaging 200 regulatory changes every day. Keeping pace with change is a never-ending battle.
For the most efficient strategy, Dickenson urges firms to invest in configurability. Many firms are great at horizon scanning and anticipating new obligations, he explained, but this is only half of the answer. “My advice is to spend time with peers to develop common, best practice approaches to compliance and to build programs in highly configurable platforms that can evolve as requirements emerge and evolve. Star helps firms do exactly that by bringing them together in think-tanks and advisory boards. We also provide a leading platform that can accommodate control automation, data integration, and deep analytics.”
Another way to reduce the perception that compliance isa burden comes from simply changing the internal culture around it. Seeing compliance as a source of creativity requires collaboration and a shift in mindset. “Modern, effective compliance departments act and are perceived as a core business enabler, creating the confidence for the business to move forward with growth initiatives. When compliance officers have access to actionable data, modern tools, and a seat at the strategic table, they become partners in innovation.”
This is something Star helps to achieve through its intuitive, automated systems that embed compliance directly into daily operations, reducing the burden and friction of meeting obligations. Where regulations have increased innovation
Regulations as a force for innovation
is not some distant theory – it is already happening. Fortunately, Dickenson sees examples becoming increasingly common. He pointed to the EU’s Markets in Crypto-Assets (MiCA), the UAE’s VirtualAssets Regulatory Authority (VARA) and Japan’s adoption of cryptocurrency within its insider trading laws.
These regulations are helping to legitimise and expand digital finance, ensuring a wider financial market that provides greater opportunities for consumers. While digital assets had initially been considered a wild west from criminal activity, these regulations are helping to remove fears, increase security and encourage more firms to offer related services.
Dickenson said, “These frameworks invite institutional participation and foster cross-border growth. Star supports this evolution by equipping firms with solutions designed for both traditional and tokenized assets, ensuring compliance keeps pace with innovation.”
Digital assets are at an important stage in their development, Dickenson noted. How regulations bring clarity and rule sets to these types of assets will define the next wave of innovation. This more supportive environment is already helping the digital asset landscape. There is a convergence underway of traditional and decentralised markets, as seen with crypto trading platform Kraken’s recent acquisition of US retail futures trading platform NinjaTrader. Similarly, traditional banks and wealth firms are exploring products for digital assets.
Another area of innovation that will be defined by upcoming regulation is AI. The technology has gained a lot of attention, particularly with the rapid advancement of large language models (LLMs) and generative AI. Regulators around the world are currently building guidelines and frameworks for how AI can be safely adopted within the financial market.
Dickenson added, “Firms that prepare early will be able to adopt these technologies responsibly, launching products faster and with greater trust. Star’s work in AI-assisted compliance and crypto assets trade supervision solutions reflects this evolution, helping clients stay ahead as oversight and innovation advance together.”
Accountability is also moving up regulatory agendas globally. Regulations like the UK’s SMCR, Ireland’s IAF, Australia’s FAR and Singapore’s IAC, all put a limelight on individual accountability to boost governance and standards of conduct. As AI gets adopted into more areas of the business, it could also spark a change in accountability rules to ensure it is not misused by employees.
Dickenson is a firm believer that embracing the letter and spirit of accountability gives firms an advantage by having certified, professional and confident professionals in the field. It doesn’t end there, as it can help inspire confidence in customers and help to win business.“
Centralized tracking of roles and responsibilities, employee training, attestations, and certifications ensures clarity and reduces operational risk, while real-time quality control of sales of financial products assures compliance in the field and builds customer confidence.” Star’s Individual Accountability solution ensures companies can monitor individual accountability from a single dashboard. Clients can maintain records of responsibility maps, conduct employee assessments, establish KPIs tailored to role readiness assessments, and gain visibility and oversight on all processes.
Ultimately, the tools can save teams time, bolster efficiency and foster transparency.
Looking ahead
Regulation doesn’t need to be seen as restrictive; the best results come from open collaboration between industry players and regulators. Open communication needs to start early and occur frequently, allowing both sides to build trust with shared pilots, open data initiatives and proactive engagement on emerging risks. “The result is regulation that protects markets without stifling progress.”
StarCompliance helps companies that want to take advantage of the opportunities posed by regulations. Its suite of employee and firm compliance SaaS products provides a unified platform that leverages automation, analytics and adaptability.
Dickenson concluded, “From crypto and employee trading to accountability regimes and material non-public information(MNPI) management, Star delivers real-time surveillance, configurable workflows, and comprehensive oversight. Our mission is to empower compliance teams to not only meet today’s standards but also anticipate tomorrow’s, transforming compliance from a checkpoint into a driver of innovation.
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