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The Role of the Compliance Function in the Financial Sector in the Age of Digitalisation, Artificial Intelligence and Robotisation

Author

Listed:
  • Gábor József Harkácsi

    (Magyar Nemzeti Bank)

  • László Péter Szegfû

    (Magyar Nemzeti Bank)

Abstract

Our analysis is intended to fill a gap in the sense that the focus of our study is on the challenges of the compliance function and their responses, putting into complex perspective the lack of and the need for striking a delicate balance between the quality of the international and national legislative environments and the role of ethical and due diligence frameworks. As a result of digitalisation, FinTech enterprises have become unavoidable in the world of financial services, which has had the effect that the business and risk models of incumbent players have changed, exerting a strong influence on the regulatory environment and in parallel on the development and change of trust and reliability as well as ethical and prudent conduct. Inevitably, regulation will always fall behind new needs and new emerging technologies, since authorities need to develop a thorough understanding of the functioning and risks of these technologies in order to establish adequate regulation of them. The compliance function must find its place and role in this changing environment in order to be able to efficiently support financial sector participants in their duty to comply with rules and ensure fair and ethical conduct.

Suggested Citation

  • Gábor József Harkácsi & László Péter Szegfû, 2021. "The Role of the Compliance Function in the Financial Sector in the Age of Digitalisation, Artificial Intelligence and Robotisation," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 20(1), pages 152-170.
    • Handle: RePEc:mnb:finrev:v:20:y:2021:i:1:p:152-170
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    More about this item

    Keywords

    digitalisation; artificial intelligence; ethics; compliance; trust; banks; FinTech; PSD2;
    All these keywords.

    JEL classification:

    • D18 - Microeconomics - - Household Behavior - - - Consumer Protection
    • D53 - Microeconomics - - General Equilibrium and Disequilibrium - - - Financial Markets
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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