Surveillance at a crossroads: What 1LOD’s 2026 Benchmarking Survey tells us about the state of the industry

Written by a human

For years, communications monitoring has been quietly getting on with the job. Firms have built out programs, and the industry has (largely) kept pace with regulatory expectations.

But according to 1LoD’s 2026 Surveillance Benchmarking Survey and Report, that period of relative, calm stability may be hiding something: a function on the edge of a major transformation.

The report, which draws on responses from surveillance leaders across global financial institutions, includes a foreword from Richard Littlechild, the Financial Conduct Authority’s (FCA) Head of Secondary Market Oversight. He believes we are experiencing “the calm before the storm.” The technology needed to reshape surveillance exists, but the question is whether firms can build the foundations needed to allow that transformation to take place – and why it all starts (and ends) with data.

The regulator’s message is unambiguous

Littlechild’s foreword sets the tone for the report. With the FCA’s Market Abuse Regulation (MAR) approaching its tenth birthday, he makes clear that patience with firms still failing to get the basics right is wearing thin.

Granular risk assessments, surveillance controls mapped to identified risks, and strong data governance are no longer ”nice to haves”, they are must-haves, and the regulator may be ready to act where firms aren’t getting the basics right.

The warning to firms with unmonitored risks and that have no plans for strategic solutions to mitigate them was particularly direct – they are a long way from meeting the FCA’s expectations.

This message carries extra weight given one of the report’s most striking findings: 22% of banks surveyed admit their current surveillance infrastructure does not provide effective management of market abuse risk. And this isn’t solely confined to smaller institutions – large organizations also acknowledged the gap.

Culture is no longer just an HR issue – it’s a regulatory risk

Perhaps the most significant shift captured in the report is how firms are tackling monitoring conduct and culture. In 2024, 41% of firms said they would not use their surveillance tools to proactively monitor workplace culture, citing concerns about overlap with HR functions and the risk of generating false positives. Two years later, 89% say they will.

One of the drivers for this shift is likely the FCA’s Policy Statement PS25/23, published in December 2025, which explicitly links bullying, harassment, and inappropriate conduct to the regulator’s “fit and proper test” for employees and senior personnel.

Culture is no longer just an HR problem. It is now a regulatory risk – one that firms are expected to monitor, manage, and mitigate accordingly. The report notes that inappropriate language and tone in communications are identified as leading indicators of current or future misconduct – financial and non-financial alike.

Historically, firms have had to “choose their battles” when it came to monitoring, with lack of resource and the deluge of alerts, red flags, and false positives restricting the number of use cases they could leverage surveillance for. In 2026, the maturation of AI-driven surveillance means firms can ingest data across multiple channels and languages, engaging with contextual meaning rather than just flagging keywords.

The same systems built to meet regulatory requirements like MAR are now, almost by design, becoming tools for broader conduct and behavioral risk detection.

AI’s transformative potential is real – but unevenly distributed

As many will attest, AI is currently dominating the conversation across all facets of regulated industries, including recordkeeping and surveillance. 1LOD’s 2026 report reflects this.

In e-comms and voice surveillance, around 70% of firms are in proof-of-concept or active deployment of AI-enabled solutions. The benefits are tangible, with firms describing material improvements in language coverage, channel monitoring, and the ability to extract meaningful insights from previously unmanageable volumes of data.

However, while many firms are making initial inroads and increasing investment, not a single survey respondent said that AI is fully embedded as part of their surveillance operating model. As one global head of surveillance at a European bank shared:

We’ve got multiple AI initiatives running, but very few that you would call truly operational.

A factor slowing full implementation and integration of AI that cannot be overlooked is data – firms have got quantity, but may be struggling with quality.

Data: Quality and quantity

At the heart of the AI implementation challenge is data – more specifically, data quality. For 71% of surveyed firms, fragmented data across silos, lack of standardized identifiers, and inconsistent data quality are the biggest barriers to surveillance effectiveness. These are not isolated issues: they represent a deeper, structural problem with how many institutions manage and govern their data.

The report highlights a difficult, but necessary realization. AI can achieve great things, but surveillance systems can only ever be as effective as the data pipelines that feed them. Firms need to ensure that the data they are capturing, storing, and channeling into AI solutions is complete, centralized, accessible, and of the highest quality. Because garbage in only ever results in garbage out.

Building for what comes next

The findings of the report highlight surveillance as a function that is at an inflection point. Operationally active and clearly effective, ambitious and keen to leverage AI technologies – but constrained by resource and by structure.

Monitoring teams are stretched thin, responsible for meeting regulatory obligations while simultaneously expected to drive a technology-led transformation that requires considerable investment, both in terms of time and finance, that hinges on firms having mature, quality data across their organization.

Global Relay’s communications surveillance platform is built for precisely this environment – helping firms capture, archive, and monitor communications across an ever-expanding range of communications channels, while enabling the AI-driven analysis that modern regulatory expectations to demand. As the demands on surveillance functions grow, having the right infrastructure in place isn’t a nice-to-have; it’s the foundation on which everything else is built.

Read the full 2026 Surveillance Benchmarking Survey & Report and benchmark your own surveillance program against your peers.