Navigating Regulatory Change: Strategies for Effective Adaptation in the Era of Generative AI

This IDC Perspective highlights the strategies for effective adaptation of regulatory change in the era of generative AI. The pace and complexity of regulatory change is accelerating, placing significant strain on traditional compliance processes, particularly for medium-sized and multi-jurisdictional financial institutions. Manual methods can no longer keep up with evolving expectations for faster implementation, broader coordination, and real-time visibility into control updates. IDC survey data reveals that while only a small percentage of institutions used AI for regulatory compliance in the past year, a ninefold increase is expected in the next 12 months, signaling a major shift toward technology-driven solutions. Generative AI and agentic AI are emerging as critical tools, capable of interpreting regulatory texts, extracting and aligning obligations, and coordinating implementation activities. These capabilities, especially when combined with embedded regulatory expertise, reduce lag, enhance consistency, and create defensible audit trails that support supervisory expectations. To ensure effective adoption, CIOs and CCOs must evaluate current processes, prioritize integration and auditability, and establish governance protocols that clearly define roles, responsibilities, and quality controls. Institutions that embed these safeguards into procurement and deployment will be positioned to capture the benefits of automation without compromising compliance integrity or oversight."The move from manual to AI-driven regulatory change is not just an efficiency upgrade," says Sam Abadir, research director, Risk, Financial Crime, and Compliance, at IDC Financial Insights. "It is a strategic necessity for compliance readiness."