Data Orchestration Operational Excellence

4 Challenges Facing RegTech Implementation

By Colm Dowd 18 September 2023

In the ever-evolving landscape of the financial sector, the use of RegTech in regulatory change management, has gathered momentum as a way to streamline compliance processes. By leveraging advanced technologies like artificial intelligence (AI), machine learning and automation, RegTech solutions are helping reduce risks and allocate resources more efficiently. These technologies automate mundane tasks, allowing human professionals to focus on more strategic initiatives while ensuring nothing is missed in the ever-changing compliance landscape.

RegTech has been the subject of a series of recent events – because alongside the acknowledged benefits, there are still hurdles to overcome when implementing it.

In this blog, we’ll look at those hurdles, flagging important considerations when looking at RegTech solutions.

Challenge 1: Navigating complex and varied regulatory landscapes

One of the biggest challenges RegTech solutions grapple with is the complex landscape of regulations. Financial institutions operate across multiple jurisdictions, each with its rules and compliance requirements. Navigating this maze poses a significant challenge for RegTech providers and financial firms alike.

Solutions need to be adaptable so they can accommodate various regulatory frameworks while maintaining accuracy and consistency.

Challenge 2: Resistance to change

While RegTech offers compelling solutions, integrating those solutions into existing processes and tech stacks can be a delicate undertaking. Financial institutions often have entrenched procedures and legacy systems that resist change – both technologically and culturally.

Adopting RegTech requires a cultural shift within these organisations, involving a focus on change management, budget allocation to risk and compliance departments as well as employee education in emerging technologies.

Challenge 3: Handling the quantity, complexity and speed of information

Financial institutions handle a staggering volume of complex data on a daily basis. You need RegTech solutions that cope with that influx – processing, analysing and reporting accurately and swiftly.

Because of the real-time nature of financial transactions, platforms must operate seamlessly without compromising on accuracy. And they must be able to keep up from a technology perspective without requiring continual upgrades to users’ infrastructure. In other (more technical) words – they need architectures built for innovation.

Challenge 4: Extracting insights from data

Data’s transformative power lies in its ability to provide insights. However, one of the significant challenges facing RegTech is the presence of siloed data sources within financial institutions. Different departments often maintain separate storage and processing systems, resulting in fragmented information that prevents thorough analysis.

You need solutions that bridge the gap between these siloed data sources, so there’s confidence that entire compliance lifecycles are accounted for.

RegTech is a formidable ally in the quest for efficient and effective compliance. Overcoming these 4 challenges requires a combination of technological innovation, adaptive solutions and collaboration between RegTech providers and financial firms.

To find out how we can help your firm leverage RegTech, get in touch.

See other posts by Colm Dowd

Head of RegTech

Colm has more than 17 years’ experience in Financial Services. A Programme Manager, Financial advisor, Contact Centre Senior leader, Technology and Risk Transformation Expert. Colm also has qualifications in Business, Finance, Project Management and RegTech from IOB, LIT, PMI and Cambridge University. Now leading exciting initiatives in Regulatory Technology at Engage Hub.

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