Regtech Should Become A Mandate After Covid-19

High pressure on the function like Anti-Money Laundering and Counter- Financing of Terrorism (AML/CFT). Some of the banks have introduced Regtech solutions to assist. Powered by cognitive machine with in-depth learning data analytic modelor people simply called it “AI,”it can primarily reduce the false positive alerts, and extract a better insight for the AML officer. AI is useful in identifying a nomaly patterns,those intricate and highly organized crime cases can now be easily picked up and escalated for an in-depth follow-up. And the rest of the events are being handled by the Robotic Process Automation. This intelligent systemic workflow helps to streamline the end to end process and improve the data quality control.

‘When God closes a door, He opens a window.’ For example, many traditional people including elderly started online shopping recently and learning very fast. We should be prepared as the traditional customer behaviour had been dramatically transformed to digital by the pandemic. Those in-person banking and some other traditional financial services become difficult in the current situation. However, banks had been embraced Regtech earlier, such as the remote account opening services should benefit and attracted new clients from this ‘window’. Usually, there are two stages: firstly, authenticating the genuineness of the identity documents and then confirming that the person holding the ID is indeed the customer. With the help of AI and facial recognition technology, the system can perform an accurate assessment for each online applicant and escalate those required additional verifications. The same problem with the commercial clients as many company’s staff is still WFH, or because of the travel restriction,the bank cannot conduct the required comprehensive customer due diligence on-site for all the clients. Electronic KYC (eKYC) is another Regtech transformation with a remote, paperless process that minimizes the costs and traditional bureaucracy necessary in KYC processes. Streamline and simplify the due diligence with a systemic risk-based approach. Regtech was not only resolved the problem of anti-infection measures during the pandemic. In the long run, it created the new business channels with significant opportunities align to the future generation.

Looking at the future,there seems to be substantial uncertainty and risk across the global business environment. Additionally, the regulators should be keeping a close eye to ensure financial stability. Banks will have to fight the battle on the front line while capable of managing the highly volatile risk while supporting the increasing demands of regulatory enquiry and fulfilling any new laws or regulatory control requirements. Both risk monitoring and regulatory enquiry will require a faster reporting capability. End-to-end automation of reporting and a well-integrated or centralized reconciliation platform should be the key.

Lastly, don’t forget the importance of Cybersecurity; it has already become a glaring personal and national security issue. Taking the lesson of Zoom Video,it has been outperforming at the beginning of the coronavirus outbreak. Unfortunately,its reputation as well as the market shares, were largely hit due to the lack of cybersecurity. Security flaws were not being handled seriously, and customers also concerns about their data protection. While banks are going through a digital transformation journey with Regtech, it is crucial to adopt security by design from the beginning of the development. Cybercrime and malicious hacking have also intensified, with the advent of digitization and automation of financial systems, the financial crimes have become more electronically sophisticated and impersonal.