Regulations will encourage firms to invest heavily in insurance technology

Financial services firms will continue to invest heavily in technology over the next two years as they adjust to regulatory change, a study conducted by Longitude Research has found.

The market research firm’s survey found that regulatory change was second only to market volatility as an issue for executives. The report claimed new regulations had caused insurance and other financial service firms to rethink their approach to compliance and restructure their organisations.

The study found that only half of respondents felt they were highly ready for the regulatory changes they must confront throughout 2014 and 2015.

Sang Lee, managing partner of advisory firm Aite, said, “Regulatory reform is putting the financial services industry under intense pressure, and the situation will not change in the near future. This pressure is being felt all the way up to the C-suite and the board. Regulatory uncertainty has forced some companies to put off key investments in new industries and geographies at a time when they are increasing their investment in compliance across departments.”

He added: “Regulations may be putting a strain on the industry, but we are starting to see some companies use them as an opportunity to reorganise themselves along more efficient lines. These businesses will be the future leaders in the industry.”