The effectiveness of digital technology in enhancing regulatory compliance in the banking sector

Abstract

This study explores how compliance professionals in South African banks perceive and experience the effectiveness of digital compliance technologies in supporting regulatory compliance. Guided by Institutional Theory and the Technology Acceptance Model (TAM), the research adopted a qualitative, interpretivist approach using semi-structured interviews with twelve compliance professionals from traditional and digital-only banks. The findings reveal that while digital tools enhance accuracy, traceability and monitoring, their perceived effectiveness remains moderate due to integration gaps, limited user readiness and persistent manual oversight. International pressures, particularly, coercive regulatory demands following the Financial Action Task Force (FATF) Greylisting, drive adoption but not optimisation. Behavioural factors, including user trust, digital literacy and job insecurity, significantly influence acceptance and the continued use of digital technologies. The study theoretically contributes by bridging Institutional Theory and TAM, identifying perceived job security as an important factor that influences technology acceptance. Practically, the study offers insights for banks and regulators in aligning legitimacy-driven adoption with user-centered implementation to enhance compliance outcomes. The study concludes that digital compliance effectiveness in emerging markets depends on harmonising institutional conformity, organisational capacity and human adaptability.