RegTech-Ready (Steady, Go): A Guide To RegTech for Beginners.

RegTech-Ready (Steady, Go): A Guide To RegTech for Beginners.

Anna Bennett

Head of Partners at Monitise FINkit

Anna Bennett has more than 20 years’ experience of working in the technology sector to serve clients across a number of verticals from Telcos to Banks and FinTechs. Anna has worked for Monitise for the last three and a half years and is Head of Partners. She’s responsible for defining and executing Monitise’s partner strategy, selecting the right mix of partners to provide a coherent and comprehensive suite of solutions for Monitise’s retail banking clients. In her quest to ‘find the best’ Anna has dealt with more than a hundred and fifty FinTechs over the last eighteen months and her work was recognised by Innovate Finance who named Anna on their Women in FinTech Power List 2016.

Views 1745

RegTech-Ready (Steady, Go): A Guide To RegTech for Beginners.

27.03.2017 12:45 pm

RegTech – a buzzword used commonly over the last year in FinTech and Finance - but what is it, who is it for and what does it do? Should you implement it? Do you need it? Just some of the dozens of questions I’ve been asked over the last six months and I thought I’d do a quick beginner’s guide as there are very little of those out there. And as to how to pronounce it – it’s Reg as in Peg, not your Great Uncle Reg who’s worth a fair wedge. Minor pet hate, I’ll get back to the point …

RegTech has in fact been around (if not in buzzword, but in application form) for quite some time and is only going to get broader in its applicability and automation. It is in truth a myriad of different solutions all aiming to reduce the burden on banks of holding large amounts of data and delivering regulatory compliance. As we all know, Compliance is the backbone of banking and banks in breach of regulations this face serious penalties. These regulations are what keep our data and our money safe, so being in breach is a bank’s worst nightmare. It’s why, despite branches becoming more scant and customer call centres being outsourced, you see compliance departments that are headcount-heavy and on the increase. Banks simply won’t take the risk of falling foul of regulations. Great, right?

Well – not really. Because until RegTech entered Stage Left, all of this was completed by isolated systems, not natively built for compliance, pieced together by human intervention and then filed with the regulators. Only a handful of key core systems prevented compliance from being broken and it allowed for great chinks in the banks’ armour as can be seen with all of the court cases in the last few years. For those ‘dark individuals’ within banks who wanted to try and work their way around compliance and take their chances, they were able to find a way of doing so.

So, enter RegTech. From mere compliance report filing (itself becoming more onerous by the day) through to the highly sophisticated regulation of deals and buy-side/sell-side monitoring in the markets, to behavioural analysis of teams and predictions of weak factors and platforms that offer things like MiFID II, GDPR, PCI and PII compliance by design, RegTech covers a multitude of areas right across the banking spectrum and can greatly reduce a banks’ collective headache by automating a great deal, sometimes all, of the requirements. It takes away dependency on human factors and it removes the ability of persons trying to break protocol, making the whole process smoother and stronger. Furthermore, it also makes sense of a bank’s vast lakes of data and allows new services to be delivered to the customer. For more details, you can look to the FCA’s handbook for guidance on what tools are used for monitoring compliance: https://www.handbook.fca.org.uk/handbook/SUP/1A/4.html

In my view, compliance needs to start with design, whether you’re a bank or a FinTech. If you design your processes and your products with compliance baked-in, you’ll already be ten steps ahead of where you were previously. Carry that throughout all of the operational service of your products, through all of the processes and through to the back office and you’ve just improved a hundred-fold on where you were before. Not to mention that once implemented, when regulations change, compliance with them is a tweak to the tools already in place.

Of course, there will always be humans trying to break processes, operate outside of the system entirely and generally find ways around - and for that reason, you will always need human headcount in your compliance department, keeping a watchful eye. However, to reduce the burden on them and the risks that they face – RegTech is a prayer, answered. 

Latest blogs

Nish Kotecha and Noslen Suárez PhD Finboot

How blockchain can help us have trust in the food we eat

Today’s food supply chains are global, connected and generally efficient, but the COVID-19 pandemic has shone a spotlight on areas of weakness. The urgent need for robust and resilient systems and processes has been brought sharply into focus, and Read more »

Chris Miller RSA Security

Back to Normality: Five Steps to Stay Resilient After Disruption

The financial services sector has lived through many global disruptions, but the nature of recent events has put an unprecedented strain on operational resilience; from needing to ensure critical functions could continue with skeleton staff and Read more »

TYRON JONES n/a

How Technology Has Disrupted the Used Car Buying Experience

We’ve seen many fields change rapidly as a result of the integration of modern technological advancements over the last couple of decades. And it looks like more is coming on the horizon as well, judging by current trends. One of the markets that Read more »

Shuvo G. Roy Mphasis

Reboot 1.0: How financial services technology can enable the supply chain to support a post-lockdown boom

Ground control and Captain Tom When veteran Captain Tom Moore decided to walk one hundred laps of his garden before his 100th birthday to raise funds to support NHS heroes battling Covid-19 from the frontline, he never imagined that he would Read more »

Lisa Gutu Salt Edge

Building a PSD2 compliant channel: challenges and opportunities for financial institutions

PSD2 obliges ASPSPs including banks, e-wallets, prepaid cards and other companies that offer payment accounts to provide at least one channel for secure communication with third party providers (TPP). Even neobanks or e-money institutions, including Read more »

Related Blogs

Kevin Fox W2 Global Data

Global Identity Verification Made Easy

Know Your Customer (KYC) poses industry-wide challenges and it will continue to do so unless we – as a #RegTech supplier – take proactive steps to cultivate positive change. As regulatory pressure on banks and corporates alike intensifies, the Read more »

Mark Smith Ayming

How FinTech, RegTech and InsureTech Businesses are Continuing to Shape the Financial Services Landscape

Within the last decade there has been a pattern of people quitting their jobs in big financial services firms to launch start-ups, often in partnership with technologists similarly intent on shaking up a niche area with new technology. FinTech start Read more »

Mike O’Keeffe Corlytics

Cutting through competitive chaos in regtech

The global regtech market is exploding because there are big problems to solve. Banks and financial services firms are grappling with an overwhelming volume of complex regulatory change and 2,500+ compliance rule books globally. With the cost of Read more »

Shakir Ladak Alpha Insight

Going With the Flow – How the Surge in RegTech Innovation Will Lift the Burdens of Compliance for the Financial Sector

Until the financial crisis of 2008-09, the financial services industry had enjoyed almost two decades of unprecedented growth and profitability.  It had embraced globalisation with a succession of glittering mega-deals.  Unfortunately, a series of Read more »

Jürg Truniger Appway

Why Deloitte’s New RegTech Solutions Are a Game Changer

Banking operates in an increasingly complex environment. Due to the increased need for compliance, margins are diminishing and costs are rising. To stay competitive, banks are looking at various ways to differentiate themselves, whether by Read more »

Magazine
ALL
Free Newsletter Sign-up
+44 (0) 208 819 32 53 +44 (0) 173 261 71 47
Download Our Mobile App
Financial It Youtube channel