In part 2 of our blog series on RegTech we discussed how it is revolutionising regulation and compliance processes.
We discussed how RegTech has steadily established itself as an effective solution for meeting the challenges posed by regulation and compliance, driving operational efficiencies and facilitating business transactions between counterparties.
In this final instalment of our blog series, we explore the future of RegTech and how it will continue to play a role within regulated industries.
Part 3: The Future
We previously discussed how cloud-based technology has revolutionised the ability to share information.
Alongside the wider capabilities of information sharing through the cloud, businesses can deliver increased control and security over data. With businesses handling more data than ever, the requirement for secure storage has become increasingly important and is legislated.
Spreadsheets used as databases are suboptimal. There are many examples of firms in the UK using spreadsheets for recording ‘Know Your Customer’ checks, whereas in the US, regulators have already been issuing fines to firms who have been using spreadsheets for transaction monitoring. Not because they are using spreadsheets, but because the use of spreadsheets has led to privacy and security breaches. Cloud technology offers firms the increased ability to create a robust and secure environment for the handling of data.
Replacing ‘not for purpose’ applications and heavy reliance on emails, RegTech has provided cloud-based utilities that deliver document and data exchange tools utilising blockchain concepts, enabling adopters to stay ahead of the game.
Ultimately, regulation is here to stay and RegTech solutions are a logical generator of efficiencies and cost savings for regulated firms. In the last 2 years there have been approximately 187 consultation papers and new policies issued by the FCA in the UK. One of the key factors driving the adoption of RegTech is the need to reduce additional workload firms incur in achieving compliance.
Compliance shouldn’t be perceived as nasty medicine. By definition, compliance refers to ‘following a set of rules and processes’. Long before the statutory regulation of general insurance, successful firms had clearly defined processes and policies, which when followed deliver excellent customer outcomes.
Historically, some firms have sought certification for their management systems and controls from the British Standards Institute, or the International Standards Organisation.
With certifications covering areas such as Quality Assurance (ISO9001) and Information Security (27001), it is no surprise that business leaders that have embedded management systems standards are able to deliver optimal customer outcomes. Compliance with statutory regulation aims to achieve the same thing.
So, firms need not be fearful of RegTech solutions. Good businesses have been built on documented processes, standards, management and quality control for hundreds of years. RegTech doesn’t change these principles, but vastly accelerates the ability to deliver them, including price and time efficiencies.
There is no need to be apprehensive about the rise of RegTech or fear the technical innovations that are facilitating it. Think of RegTech as simply delivering ‘A Better Way’ to do what quality businesses have always done.