Does regulation help or hinder digitisation in the Australian financial services sector?

By Guy Mettrick, Industry Vice President – Financial Services at Appian

 

Every financial institute’s answer to this question will be determined by how they handle governance, risk and compliance. In an evolving landscape of financial digitisation, regulatory changes can have a range of positive or negative effects across all levels of business.

Anyone who has worked in financial services since before the 2008 global financial crisis will recognise how attitudes to compliance and regulation have shifted towards hypervigilance. Following a crisis caused by a range of factors including a lack of regulatory oversight, financial institutions rushed to improve, and as a result the sector saw exponential growth.

However, more than 15 years later, times and technology have changed, presenting opportunities to streamline those jobs once created to prevent a second financial crisis.

 

The Negative Impacts of Regulation on Digitisation

Regulatory change has a huge impact on the way organisations operate, especially as financial services are so heavily regulated. It’s a complex process for businesses to digest each piece of new regulation, understand its impact, and then update procedures, policies, risk controls, and the very way it operates to comply.

One example of the cost of compliance to the financial sector has come in the wake of the Australian Government’s ambitious Consumer Data Right (CDR) initiative. The CDR aimed to promote open and standardised access to customer data, enabling new products and services to increase competition across industries such as banking and energy. While beneficial to customers who have the option to invest in more comprehensive solutions (eg. open banking for financial planning), the cost to data holders – ie. service providers – has come into question.

A 2023 CDR Compliance Costs Review commissioned by the Department of the Treasury found that the “Indicative overall cost estimates across Data Holder implementation activities to date range from under $1 million to well over $100 million each.”

This offers one drastic example of how digitisation regulation can cost the industry more than its benefits.

Regulation also has an impact across the entire organisation as offshoots of regulatory change can impact employees day-to-day. These individuals must understand each regulatory change in the context of the work that they do, expanding the impact to every level of business.

On a multinational scale, the level of complexity is compounded as each country has a unique version of regulations that must be adhered too. These larger organisations must consider each local regulatory landscape as they roll out solutions in each location and how the countries then interact in line with their own procedures.

Australian regulators are updating and producing more regulation as the market shifts along with new technology. Managing the waves of recurring regulation can become frustrating for businesses, especially at lower levels where individuals may not understand their importance. However, if handled correctly, these regulations can be harnessed to enable greater digitisation in financial services.

One example came in early 2025 when the Australian Banking Association (ABA) urged the Government to legislate the regulation of digital payments systems, including Apple and Google wallets, “to ensure it is fair and safe for all customers.”

Australia makes roughly 500 million payments per month with mobile wallets and the ABA believes global tech companies should be subject to the same oversight and consumer protection laws as all other payment systems. Through establishing new regulations for mobile wallets, consumers will be better protected and confidence in the payment system will grow, increasing usage of digital payment systems and enabling further innovation in the sector.

 

Regulation and Digitisation Enabling Each Other

The use of new technology like generative AI (GenAI) within compliance and regulatory change has piqued the interest of financial services professionals. This is because making connections within and between a firm’s risk management systems and the data they contain can be very complex. These systems of record include their policies and procedures, risk control libraries, and compliance documentation. Professionals must then determine which piece of regulation impacts which policies and procedures and identify the associated risk controls. This is made harder by the data being spread across disparate systems and formats.

Despite the complexity, GenAI will allow for easier adoption of new regulations. A 2025 McKinsey & Co Survey found that 11% of respondents in risk, legal and compliance departments were using GenAI regularly. More promisingly, a focus on financial services saw this number jump to 21%.

While there remains some hesitancy within the industry, AI can do a good job of reading all those different libraries and start to make the connections – something that humans have historically spent a lot of time doing manually. Now, AI can provide a shortcut to those connections while offering further insights.

 

Streamlining Compliance in Complex Regulatory Environments

New technology begets more regulation and vice versa, leaving financial institutions in a constant cycle of catch-up and re-education. And while it’s clear that regulation and digitisation can coexist, this doesn’t mean that keeping up with either is smooth sailing. That is, not without process automation in place to help financial services organisations quickly and accurately adhere to their regulatory environment.

Process automation has become essential for simplifying the highly complex landscape of governance, risk and compliance. Whether it’s case management, document processing, or regulatory correspondence, process automation can streamline the day-to-day tasks that underpin compliance, freeing up resources and improving accuracy. And by removing inefficiencies, reducing manual workloads, and lowering the risk of human error, process automation can bring about compliance cost efficiencies.

As regulations evolve and shape the way each employee operates, keeping a company on the same page is becoming more important than ever. Financial institutions have typically worked with data scattered across disparate systems and formats. Process automation can consolidate this data, enabling teams to access accurate, real-time information from a single interface, which is a key requirement for timely and effective regulatory reporting.

 

Compliance as Catalyst, Not Constraint

Regulation is not the enemy of digitisation, but it does expose the vulnerabilities in how prepared an institution truly is to adapt. For banks and financial service providers in Australia, the real challenge lies not in the volume or complexity of regulation itself, but in their ability to respond. Technology alone won’t solve the problem. But when paired with a culture that embraces AI, automation and forward-thinking, it positions organisations to effectively navigate the ever-evolving regulatory landscape.

For more information on how your financial services organisation can utilise AI and automation to navigate the local regulatory landscape, please visit: www.appian.com