Regtech can transform your business

Patrick Conroy

Patrick Conroy

Regulatory technology, or ‘RegTech’, may not have entered the capital markets consciousness to the same extent as fintech, but in our data-driven economy there is little doubt that RegTech’s benefits are providing major automated efficiencies and management oversight for financial services.

In this era of ever-changing regulatory requirements, RegTech is removing the pain points in customer onboarding and meeting the compliance requirements of AML, KYC and Regulatory Reporting, except of course for those companies that are still using the laborious manual route.

Those companies holding out and ignoring the advantages and empowerment of RegTech are losing out if they are not embracing it.

In a nutshell, regulations are increasing in both quantity and evolving demands.

If done correctly, RegTech positions a firm’s compliance function to effectively transform their programme when required and innoculate the firm against constantly evolving regulatory risks.   

Successful implementations of RegTech solutions have enabled organisations to stay one step ahead of their competitors and in line with the increasingly advanced technological capabilities of regulators, who are better positioned than ever to identify misconduct and non-compliance.

Surprisingly however, there has been a suggestion that RegTech might be losing its momentum in the UK.

At this year’s Sibos conference, the Director of Innovation at the Financial Conduct Authority (FCA), Nick Cook, stated: “I think in the UK market, RegTech as an offering is somewhat struggling and plateaued at the moment. We see a reduction in the number of new entrants into the RegTech ecosystem.”

It would be surprising if Nick Cook’s take on this is a widely held view, especially given that cybersecurity, technology and market abuse surveillance are key focus areas for financial regulators across the globe.

Instead, the view should be that RegTech has never been more important.

Regulators globally expect firms to be more proactive than ever in detecting, preventing, and remediating compliance issues within their own operations.

However, it cannot be understated that meeting these expectations are costly, inefficient and in many cases impossible if an organisation just relies upon manual processes alone.

RegTech streamlines operational processes through its provision of automated, scalable and enterprise-wide solutions.

It enables users to access knowledge, produce instantaneous automated reports, conduct in-depth trade surveillance, mine data insights to provide complete overviews, utilise machine learning and recognise questionable patterns all in real time.

RegTech can be used to help asset managers effectively manage their firm’s risk and compliance programmes, and meet regulatory demands throughout their organisation, from the employee’s desktop up to the boardroom.

It helps firms - regardless of whether they are large or small - identify potential conflicts of interest in employee activities while simplifying the process for employees to submit approval requests and disclosures for gifts and entertainment, political contributions and any external business activities.

Are there downsides? Some might argue the cost of the RegTech solution itself.