AI takes centre stage in compliance as global regulation intensifies

By Vriti Gothi

Amid accelerating regulatory change and geopolitical uncertainty, artificial intelligence is emerging as a key enabler for financial institutions striving to manage compliance efficiently. The latest Cost of Compliance Report 2025, published by CUBE, highlights how technology is transforming the compliance landscape, as financial services institutions grapple with increasing rule changes and mounting operational pressure.

The study surveyed more than 2,000 senior compliance and risk officers from 1,300 financial institutions across 11 major global markets, uncovering a clear trend: regulation is once again a boardroom priority. As governments around the world look to simplify rulebooks and reduce complexity, firms are stepping up their efforts to anticipate change. Encouragingly, 16% of respondents now report potential regulatory developments directly to their executive teams or boards, a sign of improved visibility and strategic alignment within compliance functions.

Still, the challenges are significant. One in four respondents said that rising geopolitical tensions would require major strategic adjustments to their compliance and risk approach over the next 12 months, while 8% warned of potential implications for their core business models. Notably, 21% admitted their regulatory change management processes remain “somewhat” or “highly ineffective,” underscoring the continued strain on compliance teams worldwide.

Ben Richmond, Founder and CEO of CUBE, noted that the pace and complexity of regulation are now unprecedented. “Our Cost of Compliance Report 2025 reveals a surge in AI regulation, with 157 new laws and rules in a single year. Add to that trade tensions, tariff shifts and conflicting legislation, and it’s clear compliance teams are under unprecedented pressure,” he said. Richmond added that AI will play a decisive role in meeting these challenges: “We remain optimistic about the use of AI and look forward to helping our customers stay ahead of regulatory change. Our acquisition of Kodex AI reinforces our commitment to creating the industry’s first unified compliance, risk and agentic AI platform.”

The report shows that 98% of respondents have already automated at least part of their regulatory change management process, reflecting a sector-wide shift towards digital transformation. Yet, on average, it still takes more than a year for institutions to fully implement a regulatory change, highlighting the importance of smarter automation and early visibility into upcoming requirements.

Pedro Pereiro, Chief Customer Officer at CUBE, observed that compliance functions are rapidly evolving. “Customers are focused on faster insights, clearer risk identification, and smarter automation to keep pace with regulatory change. This report shows how mission-critical compliance and risk have become, and how AI is now foundational to any strategy,” he said.

Interestingly, AI itself is under increasing scrutiny. Between June 2024 and May 2025, CUBE recorded 157 regulatory insights related to AI in financial services—almost double the number from the previous year. The surge points to ongoing uncertainty around how to regulate the use of AI responsibly, as institutions balance innovation with risk management and compliance obligations.

The findings make one conclusion evident: the true cost of compliance now extends beyond manpower and process it lies in an organisation’s ability to harness technology intelligently. As regulatory expectations continue to evolve, AI-driven insight and automation will define the next frontier of compliance, turning complexity into strategic advantage.