Regulators and firms are still getting to grips with RegTech and the opportunities it presents.
But, as with any new Fintech, early adopters can leverage it for a competitive advantage. Can RegTech solutions help your business improve compliance, promote innovation and stimulate growth?
What is RegTech?
RegTech is broadly referred to as the use of technology to support regulatory compliance in the financial sector and help manage regulatory processes, taking into account the interaction between multiple regulations and different jurisdictional requirements. As with all innovation, RegTech comes in all shapes and sizes, and should be tailored to support specific needs.
The regulatory landscape is constantly evolving, and it can be challenging to manage existing compliance requirements, while implementing new obligations. This could be compounded in the near future, as the UK moves through the Brexit transition period, potentially moving from a place of equivalence to one of divergence. With increased scrutiny over regulatory reporting, and the potential for digital reporting in the future, evidencing and tracking compliance is more important than ever.
Using RegTech promotes enhanced regulatory compliance and robust audit trails. But it can also significantly reduce the cost and resources needed to perform repetitive tasks, driving economies of scale. This allows the compliance function to re-allocate regulatory capital and focus on value-adding projects that need manual intervention and subject specific expertise. In turn, this increases job satisfaction and retention, keeping specialist knowledge within the organisation. Taking this approach also offers more scope to reach long-term compliance objectives and helps organisations grow.
Leveraging RegTech can also improve the quality and accuracy of data, improving reporting processes and providing greater evidence of compliance. It can also support the consistency and traceability of documents and workflows, which can be applied to the ongoing governance and management of key policies and procedures. In the long term, these not only offer peace of mind of senior management, but allow organisations to grow through further innovation, while improving customer experience.
Nailing smart compliance
When it comes to compliance, RegTech is the next logical step in digital innovation. Firms will soon consider innovation levels as a key metric when assessing regulatory compliance success.
As businesses embrace more advanced digital tools, they continue to find efficiencies and improvements in the compliance lifecycle, with knock-on benefits for customers. Firms can stay ahead of the regulatory curve and realise significant benefits, as their RegTech approach matures.
What to do now?
Early adopters of anything can win big. Organisations adopting RegTech approaches are well placed to become market leaders in intelligent and integrated compliance functions. With reduced costs of compliance, greater scope for growth and positive outcomes for customers, firms can create a significant competitive edge. A more dynamic approach can also support a culture of innovation and promote continuous improvement within the firm.
Firms should assess the RegTech options available to them, looking at the intended use of the program, the target end-user and the integration options with existing software. Depending on the options available, firms may need to review their regulatory lifecycle and assess how it can be updated for smart compliance.
For further information on RegTech developments and opportunities, please contact Phil Roberts.