The RegTech Platform, launched in partnership between Innovate Finance and the City of London Corporation, brought together industry experts to discuss ways of addressing the barriers confronting the adoption of RegTech solutions and compliance technology, and to tackle other problems affecting the sector. As part of a deliverable by the platform, this report calls for a set of metrics focused around a ‘RegTech test’ to be applied when new regulations are introduced to assess how technology can best enable regulatory compliance.
Summary
RegTech and compliance technology more broadly are critical in helping regulated firms achieve and improve compliance with regulatory standards. With the extreme proliferation of data, the complexity of processes and the multitude of necessary regulatory obligations, achieving compliance without technology is no longer possible. However, the true potential of RegTech has not been realised despite its significant benefits.
Regulators should encourage the adoption of RegTech solutions (either built in-house or from third-party vendors). Recognising the three critical roles that regulators play in overseeing the financial services industry – policymaking, supervision and enforcement - the ‘RegTech test’ proposal suggests how the formation of regulatory policy could consider the impact of new and / or amended rules on existing compliance technology stacks, and also how innovative RegTech could more effectively help firms meet the regulatory objectives contained within the policy.
The main benefits our proposals will deliver are:
- Creating a ‘learning loop’ between regulated firms, vendors and regulatory policy makers regarding the policy impact on compliance technology and new innovations that could better meet regulatory objectives.
- Engaging regulated firms earlier on in the policy-making process will ensure they consider the impact of new policies on their existing technology sooner, allowing time for more strategic approaches to technology change.
- Reducing the cost of compliance by avoiding duplication of requirements - e.g. through the use of existing industry data standards and / or the re-use of extant reporting processes.
Acknowledgements
Dr Sian Lewin
Paul Worthington and Christopher Foo - Innovate Finance
Gordon Mead and Agnese Meloni - The City of London Corporation
Members of the RegTech Platform
UBS Group, Suade, KPMG, NayaOne, Encompass Corporation, Goldman Sachs, RegGenome, Eigen Technologies, Standard Chartered, University of Strathclyde, and EY.
