RegTech – 監理技術

“RegTech,” dubbed “the new FinTech,” has rapidly ascended from complete obscurity into prominence. RegTech is pretty much what it says on the tin (at the risk of sounding too simple). It is the use of new technology to enable the delivery of regulatory requirements. This wedding of technology and regulation is not new. But it is becoming more and more important as levels of regulation rise and attention to data and reporting increases.

The increase in investment in RegTech is because of companies having to deal with growing levels of regulation that have come into force in 2012. These include Know Your Customer, Anti Money Laundering, Basel III, the second Markets in Financial Instruments Directive (MiFID II), and the second Payment Services Directive (PSD2).

RegTech Opportunities

Companies are boosting their RegTech applications and systems so they can do more. They are enhancing the current tools in ways that release substantial advances in data management and automation. These improvements are informing breakthrough enhancements across the complete range of asset managers’ back-office functions – and more and more middle-office processes as well.

Experts agree that RegTech will play well into the Fundamental Review of the Trading Book (FRTB). It will assist firms in finding a smarter way to manage the challenges of the regulation. RegTech also shows permission for know your customer regulatory reporting (KYC), and for the General Data Protection Regulation (GDPR).

The current technologies demonstrating the most promise in relation to risk management and RegTech fit into the following broad categories:

• Data Analytics – examination of huge sections of unstructured and structured data to detect patterns and deliver business insight
• Artificial Intelligence & Cognitive Statements – the ability to capture and apply human knowledge and experience
• Machine Learning – extrapolation of business rules from the scrutiny of enormous sets of data.

RegTech Challenges

Budding RegTech companies face challenges such as disinclination by data providers to comply, and competition from big consultancies. The fast-paced growth of a number of RegTech companies and the fact that they are more cost-effective, agile, and can more easily adjust and push the innovation that is sweeping the sector makes it likely that they can meet these challenges.

Substantial obstacles exist in adopting new solutions and technologies because the confidentiality of data trumps regulatory reporting. Financial institutions must prioritize shielding the privacy of clients’ data before adopting any compliance solution. The challenge lies in ensuring that regulations strike an appropriate balance between protecting privacy and security, and effective data use.

The hierarchy of regulations poses another challenge. Regulations are intricate, diverse, and multidisciplinary. Certain regulations apply only to national needs. Yet another challenge is the lack of a clear solution among regulators on the right solutions and standards to be applied. This is a challenge because it tends to create uncertainty.

How Market Research Can Help

The RegTech market is massive. Market research is important because finance industry players want to get more value from technology with fewer dollars spent. Market researchers can scout the industry for new technologies that can be applied to banks and other financial institutions’ regulatory infrastructures. They can see which RegTech solutions offer the best means for overburdened firms to provide regulators with the data they require in a way that is faster, better, safer, and cheaper for all.

RegTech has the potential to deliver close to real-time insights through artificial intelligence filters and deep learning. It monitors capacity and detects glitches beforehand rather than the client having to take enforcement action after the fact. The potential of the RegTech market is considerable, but it’s still in its early stages and few documented case studies exist to show its return on investment.

RegTech will continue to build on the gains it has made so far. This growth will come from new tools being built to serve the specific requirements of regulated companies both within and outside the financial services industry. It’s safe to say the insurance sector will get special attention. There will be more partnerships between current financial institutions and next-generation technology providers, supporting an environment of greater innovation, which will lead to even more growth within the next few years.