Customer Communications Operational Excellence

Future-proof Compliance Management with RegTech

By Colm Dowd 9 May 2022

Digital transformation is a key strategic priority in this post-pandemic world. However, many organisations have lagged in their digitalisation due to perceived risks around security and compliance. This risk calculus is now changing thanks to RegTech.

What is RegTech?

Regulatory technology (RegTech) is any technology that enhances and streamlines regulatory and compliance processes. While it has a range of applications and use cases, RegTech is primarily used for monitoring and reporting, helping deliver more robust and more consistent compliance at a lower cost.

Using the cloud, APIs, artificial intelligence and machine learning, RegTech offers agile, flexible and data-driven solutions to regulatory challenges.

Who is RegTech for?

When you think of regulation, chances are you think of financial services and insurance. Up to 94% of RegTech vendors have tailored offerings for the onerous requirements facing that sector.

But the fact is that nearly every organisation has regulatory considerations, from GDPR to PCI DSS to ESG disclosures. And there are risk, efficiency and cost benefits to using technology to adhere to those regulations. To give you an idea, 58% of RegTech vendors cater to those outside of ‘traditional’ regulated industries.

How does RegTech simplify compliance?

The regulatory ecosystem is an ever-changing beast, especially given how many industries deal with transactions or sensitive data. This means that compliance is an ongoing change management exercise that involves:

  • Staying abreast of requirements
  • Interpreting them to understand if (or when) to apply them to the organisation
  • Conducting a thorough risk analysis of end-to-end operations
  • Applying any changes needed
  • Documenting everything for auditing purposes
  • Ensuring compliance processes are in place and maintained on an ongoing basis

Manually managing regulatory change management is therefore time-consuming, complex and often expensive.

This is where RegTech comes into its own. Using artificial intelligence, machine learning and Big Data, RegTech automates many of these processes – making them simpler, faster and more cost-efficient while reducing risk.

How does RegTech work in practice?

Let’s look at an example sourced from of how compliance management links into business strategy.

Say a FinTech has a business objective to onboard 500 new customers a month. To do this, the company needs to obtain personally identifiable information (PII) to execute its Know Your Customer (KYC) obligations. Once they have PII for a consumer client, they’re subject to data privacy and cybersecurity rules (e.g., GDPR, GLBA). When they process card payments, they have to adhere to PCI and Strong Customer Authentication (SCA) standards. And the compliance needs continue, with everything needing documentation for audit purposes.

Regulatory change management is one key use case. Technology can be used to automatically respond to the ongoing increase to daily regulatory changes businesses are being inundated with. Many organisations are still using low tech options like Excel and Word to manage compliance workflows and relying on human extraction of data from Regulatory PDFs.

For example, from 2018 the rollout of GDPR, made up of a complex series of regulatory requirements and changes meant businesses had to execute substantial changes to all parts of their business to ensure they were compliant and avoid any related data breaches that would incur hefty fines from regulators.

The cost of not responding to the changes in regulation can have a significant impact on your business not just in terms of potential fines but also the negative impact on your customers if not handled correctly. Plus, compliance breaches erode trust, making customers and investors look less favourably on your organisation.

Why look at RegTech now?

There are over 750 regulators and an average of 200 regulatory alerts every day. Managing this manually is increasingly impractical. Without RegTech, it’s all too easy for details to slip through the net.

RegTech streamlines the process of future-proofing your compliance processes, helping mitigate risks and protect stakeholders.

Get in touch today to see how Engage Hub’s out-of-the-box technology can help automate customer-related compliance requirements.

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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