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RegTech : Helping Compliance Go From ‘Policeman’ to ‘Coach’

By 10 February 2017October 11th, 2023No Comments

A really fascinating and insightful session at the ASIC RegTech round table earlier this week in Sydney, Australia. One key thing I took away from the session is that in many peoples eyes, Regtech is part of the genesis of the next generation of financial services operating models with benefits not only in reducing the costs of regulatory compliance, but new ways to change the role of compliance in financial services businesses overall.

A key theme that came out was very much that with the volume of data, and the speed for which industry participants are going to have to deal with it, that artificial intelligence is going to become a ‘must’ to maintain compliance efficiently moving forward. I heard a phrase of ‘AI will be a critical part of everyone’s technology stack moving forward’, which is a real development from pens and checkpoints. The highlight of the need for new skill sets in organisations to deal with AI will bring a whole new era of people into compliance departments.

Not surprisingly it is recognised that most Regtech businesses are B2B business rather than dealing with consumers. My view is that over time a consumer element will be introduced, however it is far from clear how this will happen until there are accepted authentication and identification networks.

The theme that I really liked, and we have been professing at Financial Simplicity for a number of years (refer to our white paper ‘Can Strategic Compliance Become a New Standard) is that in terms of some offerings to consumers, compliance will be embedded into the client interactions rather than be something that is checked afterwards. This not only improves overall consumer outcomes but also dramatically can reduce both the cost and risks associated with compliance.

Another key related theme was the theme that the role of people working in compliance will likely change from working ‘in compliance’ to working ‘on compliance’, setting out systems and processes with technology rather than performing the functions themselves. This will not only have obvious benefits but relate to ensuring that organisations address ultimately the key conduct compliance theme of ‘doing the right thing’, the highest regulatory standard of all. This also includes the subject area of regulators seeking to keep up with initiatives, and that in some cases it may be RegTech innovators that actually lead ideas and innovation that may well lead regulatory policies.

Whilst there is plenty of discussion around new techniques and technologies, there is a clear recognition that access to data is key to powering the RegTech revolution, and in places like Europe where it will be mandatory for organisations to provide access to date via API, it is likely that RegTEch initiatives will take off there quicker than environments where data access is still somewhat limited.

One of the key phrases that does however I think reflect very positively on this RegTech revolution is that RegTech technologies are essentially shortening the distance between action and compliance checking, most likely to the point where compliance is embedded into every action with a customer or market, and hence to some extent enables compliance departments to move from ‘Policeman’ to ‘Coach’ inside organisations.


Stuart Holdsworth

Author Stuart Holdsworth

Stuart has over 30 years of experience in the use of technology for the strategic competitive advantage of businesses in the financial markets and investment industry.

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