Saturday, June 15, 2024

RegTech Solutions Will Help Firms to Automate Compliance Tasks and Reduce Operational Risks, Says Deloitte

Firms must embrace RegTech solutions as they will help them automate compliance tasks and reduce operational risks associated with meeting compliance and reporting obligations, according to a report from Deloitte Ireland.

Entitled ‘RegTech Is The New FinTech, How Agile Regulatory Technology Is Helping Firms Better Understand and Manage Their Risks,’ the report authored by Lory Kehoe, Senior Manager in Strategy & Operations Financial Services Consulting for Deloitte Ireland, is based on research and interviews with RegTech companies and explores how firms can benefit from regulatory technologies and how they can leverage regulatory focused data to better understand and manage their compliance risks.

What is RegTech?

RegTech defines the marriage between technology and regulation to address regulatory requirements. RegTech companies typically have four characteristics: agility, speed, integration and analytics.

Among the notable benefits, RegTech companies provide senior executives with “an opportunity to introduce new capabilities that are designed to leverage existing systems and data to produce regulatory data and reporting in a cost-effective, flexible and timely manner without taking the risk of replacing/updating legacy systems,” Deloitte said.

So far, existing players include FundApps, a London-based company that provides users with a system that automates one’s compliance monitoring and that allows to benefit from a collaborative community managed by industry experts.

Silverfinch on the other hand, creates connectivity between asset managers and insurers through a fund data utility in a secure and controlled environment.

For asset managers, Silverfinch provides a single venue for their portfolio holdings data that will respond to many institutional client requests in an efficient, reliable, secure and cost effective manner.

On the insurance side, through its utility, Silverfinch provides an easy, reliable and cost effective method to request and organize data to the granular holdings data they need to feed their reporting and risk management models.

Other startups include RegDelta, a regulatory data management platform developed by JWG, the financial services regulatory think-tank, as well as Suade, a company that has designed a technology dedicated to banks so they can achieve continuous compliance, manage their costs and easily conduct analysis.


What’s next?

Deloitte found that alongside Dublin, other locations such as Singapore, New York, Sydney, Warsaw and Berlin, are all looking to expand their fintech communities and will most certainly become notable challenger in the RegTech race.

Hong Kong as well offers many opportunities for RegTech solutions. Zac Chen, working in one of the largest South East Asian banks and FinTech advocate told Deloitte:

“While Europe has a European Banking Authority that somewhat guides the region, we have to observe if the recent ASEAN Financial Integration Framework will provide some guideline or direction, in which I hope there will be a standardized regulatory baseline or data interchange format across the region.”

Deloitte further indicated that London has been attracting entrepreneurs from Dublin notably due to its large fintech community, lower capital gains tax and large technology and financial services talent pools.

Also, the fact that the UK’s Financial Conduct Authority and the Prudential Regulation Authority, are fully supporting RegTech and fintech startups, is a major opportunity for these companies.

In March 2015, the UK Government Office for Science released a report addressed to the government to achieve the country’s economic potential of fintech and become a world leader in the field.

Among the report’s ten recommendation, the Government Office for Science advices:

“Regulators should engage the FinTech community in automating regulation and compliance to create a state-of-the art regulatory reporting and analytics infrastructure, which we have called ‘RegTech’.

We suggest that initiatives such as Project Innovate could be used and adapted to find ways of commissioning, testing and adopting new innovative RegTech solutions.”


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