By Philip Miller, Co-Founder and Co-CEO, Solidatus
Is your organisation drowning in compliance issues? If it is, it would be easy to understand why. According to a Thomson Reuters report, it tracked over 56,000 new updates from over 1,000 regulatory bodies in 2019 alone – a rate of 217 per day. This disruption is placing a tremendous burden on large financial organisations, and it is not likely to ebb any time soon. It’s also a heavy and potentially concerning issue, given the sizable fines which can be handed down, depending on which regulations may have been breached.
It’s no wonder therefore that businesses are leaning into technology solutions to help them to lighten the load and keep pace with rates of regulatory change. In fact, the same Reuters report on fintech, regtech and the role of compliance has found that the pace of tech adoption is rapidly speeding up, of course further accelerated by pandemic conditions. Some 70% of all organisations have increased their use of technological solutions to help them to manage the pace of change, rising to over 80% of global systemically important banks (G-SIBs). These are vast multinational businesses, with numerous offices and potentially hundreds if not thousands of employees. Tracking the flow of data within these infrastructures is a mammoth task. Given the volumes of data in play across numerous internal touchpoints, and the numbers of changes being added to the regulatory landscape daily, the cost of inadvertently contravening legislation is a very real and sizable concern. And it multiplies yet again when operating across multiple territories and jurisdictions.
Regtech’s rise within large organisational infrastructures is not without its hurdles. Organisations often need to upskill employees to be able to harness the new tools. Many boards are also facing the challenge of upskilling themselves too, not only to justify further investments but also to understand the wider benefits which a good installation of these tools can bring to an organisation. In practice however, the immediate cost of regtech investment can be leveraged if the organisation acts proactively to use this regulatory burden as an impetus for improving business functions, as well as meeting its obligations. It is clearly a much better outcome for the business to use the single one-off investment in something that cannot be avoided, and then plough all of that knowledge into the business-as-usual pillars of Governance and Optimisation. Furthermore, when a business can get a better grip on how its data flows throughout its internal infrastructure, that internal map can often be streamlined and significant economies discovered which will create efficiencies for the whole operation. What board wouldn’t be open to spearheading additional business economies while also tackling a mounting risk issue?
The good news is that a new breed of regtech technologies are emerging which lower many of these hurdles to their internal adoption.
Our solution, for example, takes a visually-led approach to mapping a business’ internal data points against the specific set of compliance issues faced. It means that at glance, internal stakeholders can see where issues of compliance may be arising, but also identify areas where the business may already be adhering to new regulatory changes thanks to processes already in place. Rather than requiring detailed technical knowledge and a weeks-long induction plan, it has been built from the ground up to be intuitive to use, so that there aren’t any heavy training needs to implement the solution and start getting results. It empowers the everyday delivery of IT and gives employees the tools to develop systems that are compliant by design from the outset, rather than being expensively modified to achieve compliance as an afterthought. And the visual nature of the technology means that senior stakeholders can quickly spot and enact efficiencies without needing to wade through numerous spreadsheets and data points to piece together the proof.
Technologies like these are rapidly becoming integral to many financial multinational’s compliance and risk management strategies. New international legislation is constantly developing and evolving and can be unpredictable. Combined, these will cause a mounting issue for large and complex financial entities to handle, alongside the equally escalating size of their own data burdens. However, as we have seen, getting to grips with a technical solution to the issue may not be as problematic or onerous as some may think, and can in fact have broader benefits to the business as a whole. By taking a balanced look at the latest regtech innovations, large financial firms may find solutions which not only suit those who need the detail of data management, but also empower the stakeholders within an organisation who need to be able to see the bigger picture.