With the FCA’s new consumer tax regulations coming into effect in two months, there’s going to be major change in the regtech space. This presents an opportunity for financial institutions to adopt a new approach to compliance and regulation.
We’ve always heard that collaboration is one of the best ways forward in the fintech industry, and what better way to collaborate than to share impactful lessons learned. With this in mind, we reached out to the industry to find out which new regtech techniques and tools have worked best for them over the past year, and which they see as having the most impact going forward.
Automation is now a necessity in RegTech
Kyckr COO Steve Lamb
In such a booming market, there is one technology that can help new entrants benefit the most: automation, explains Steve Lamb, COO of Kyckr, a B2B information services regulatory technology company. He said: “Today, around 600 companies claim to be in the regtech space. With so many players, not only are we likely to see a lot of consolidation in the next few years, but it also underlines how mature the industry is for automation.
“There needs to be proper regulatory inquiry into the process. Just because a business claims to be compliant or has said the right thing to regulators and governments doesn’t prove what’s going on behind the scenes. With many companies claiming to have cracked complete automation of the compliance process, we Control, experience, top management representatives and involvement of regulators must be maintained to accompany this technology.
“Regtech winners are likely to emerge within the next 12 to 24 months. These services and tools not only claim to do the job, but have verifiable case studies to prove it.”
From achieving compliance to staying compliant
Joe Fitzgerald, Senior Vice President, Lease Management Strategy, Visual Lease
According to Joe Fitzgerald, senior vice president of lease management strategy at lease optimization software provider Visual Lease, technology to help enable lease accounting compliance has been widespread over the past year. Looking ahead, he believes that implementing technology to help maintain compliance will be necessary. He said: “Last year, many private companies focused on adopting the new lease accounting standard ASC 842.
“Going forward, however, many will shift their focus from achieving lease accounting compliance to maintaining lease accounting compliance. This will prove to be far more complex than what their initial adoption might have led them to believe.
“In fact, ongoing lease accounting compliance remains a challenge for organizations, as more than 80 percent of companies are not prioritizing investments in the dedicated technology, people, and processes needed to successfully manage lease-related expenses.
“To meet this need, businesses should look to implement purpose-built technology that enables strong lease controls, which will help ensure that companies can easily track all terms in their lease agreements, facilitating key stakeholders (financial, real estate, legal, procurement, etc.), and manage access rights and approval workflows.
“With the right technology, the ‘people and process’ part of the equation will quickly fall into place, leading to new efficiencies and improved operations.
“Implementing lease controls also protects organizations from common risks associated with misreporting financials, such as increased audit fees and reputational damage. In addition, having a lease control framework also allows businesses to gain unique insights from their lease portfolio, Ultimately use the data in it to make smarter strategic decisions.”
A number of influential technologies
Andrea Maria Cosentino, Founder and Host, Crypto Club at Rise by Barclays
While each company’s experience with compliance technology implementations varies, it can sometimes be challenging to choose just one impactful technology over the others. Such is the case with Andrea Maria Cosentino, founder and host of the Rise Crypto Club at Barclays, the home of fintech. For him, a number of RegTech technologies and tools stood out in the last year:
“The past year has seen a number of successful and effective new compliance, RegTech and Suptech technologies and tools. Here are some examples:
- Regtech sandbox: Regulators have been establishing regtech sandboxes to enable companies to test and develop new compliant technologies in a controlled environment.
- Digital Identity Verification: Digital identity verification tools leverage technologies such as machine learning to quickly and securely verify customer identities, which is becoming increasingly important in remote work environments.
- Transaction Monitoring and Fraud Detection: Advanced analytics and machine learning algorithms are used to detect suspicious activity and fraud attempts in real time.
- Automated Compliance Reporting: Regtech tools automate compliance reporting and reduce the time and resources required to prepare regulatory reports.
- AI-driven compliance: AI-driven compliance tools can help financial institutions simplify compliance tasks and monitor compliance risks.
- SUPTECH Tools: SUPTECH tools are used to improve regulatory oversight. For example, machine learning algorithms can be used to analyze regulatory data to identify areas of risk or non-compliance.
- Data Analytics: Regtech and Suptech tools are increasingly leveraging data analytics to provide insight into compliance risks and help organizations make informed decisions.
“Collectively, these new technologies and tools enable organizations to automate compliance processes, improve regulatory reporting and enhance regulatory activities.”
The tool supports how and when to conduct due diligence
Bridget Abraham, Chief Compliance Officer, Remitly
Bridget Abraham is chief compliance officer at online money transfer service Remitly. As more and more companies take full advantage of the data available to them, Abraham explains how risk assessments help Remitly improve its service: “Risk assessments are a very useful tool for our team. These assessments help us identify and guide developed a risk-based approach to designing procedures on how and when to conduct due diligence on clients.
“We also implemented an early warning and alerting process to refocus and bring problems to our attention when they arise. Additionally, we found that as more data entered the system, deeper investments in machine learning improved our models It’s an effective strategy for us.
Information source: compiled from THEFINTECHTIMES by 0x information.Copyright belongs to the author Francis Bignell, without permission, may not be reproduced