Take the tech in RegTech seriously

March 30, 2020

Regulation is complicated and demanding, even in a predictable environment. The pressure and stress rise exponentially in the midst of volatile and uncertain conditions like we’re facing today, and it becomes even more important to spend your dollars wisely.

But too often, when people think about regulation, they throw people and tools like spreadsheets at each requirement. Sometimes they’ll pull in a niche technology provider for a particular problem. But if you take a step back, you’ll see that it’s not just a question of running an isolated calculation. Compliance is really a broader technology problem.

Each calculation has an operation around it and has data coming into it from various sources. And even if another regulator asks for a similar calculation, it won’t be identical. How do you make compliance repeatable and sustainable? You must approach it as an organizational problem and consider your technology ecosystem, including third parties such as your market data and technology providers as well as your own organization and processes.

So don’t just look for smart new tech. It may appear to be brilliant, but if you don’t have the data and operations under control, you won’t get the best results. Start by thinking about process and systems. What will be useful, not just clever? With that broader view, you can also identify where you can find value out of your investment in RegTech.

So with one exercise, you get multiple benefits:

  • Greater confidence that you’re solving the compliance problems that are on your list today – so you know you’re going to avoid sanctions and fines.
  • A future-proofed organization – regulations are constantly changing, but the right technology and processes will easily adapt.
  • A lower total cost of ownership for your RegTech spend – instead of continually replacing tech because it only solves the immediate problem, you’ll have tech that you can simply expand or enhance as needed.
  • Lower operational spend – your providers will be able to handle a range of challenges across your business and support it with services.
  • Greater value from investments in RegTech – with more control over regulatory compliance, you’ll be able to draw business insights from that data that can help drive growth.
  • More leverage from emerging tech, especially AI – good data management will feed data-hungry machine learning tools with high quality data, and clean, controlled processes multiplies the impact of AI improvements.

The guy with the smart widget probably has smart stuff. But combine that with knowledge and control over your data and systems plus services to operate parts of that for you, and you can make even smarter choices.

About the Author
Harry Stahl, Senior Director, Enterprise Strategy, Capital Markets, FIS
Harry StahlSenior Director, Enterprise Strategy, Capital Markets, FIS

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