By Pip Butt, Director, PwC
RegTech (Regulatory Technology) helps companies solve regulatory challenges by leveraging advancements in technology. Companies that successfully adopt RegTech early enjoy the advantage of efficiency, increased precision, ability to redeploy key resources to more judgemental high-risk areas, and regulatory relief over those companies that fail to make the transition.
Companies are having their own RegTech successes, and where they are, the common attributes of leading companies could be summarised as users of (i) data analytics tools; (ii) dashboards and (iii) continuous monitoring. Creating a foundation to adopt new and emerging technologies like RegTech.
By adopting proven RegTech solutions, more immediate operational and compliance benefits can be gained, including:
• increased capacity within 1st and 2nd line compliance teams to support the compliance needs of the business and the services delivered to end customers.
• nearer real-time information that can also support the strategic objectives of the enterprise.
• a catalyst for further digitization of other business activities.
There is still value in RegTech solutions that need time to mature, however, more steps may be required, such as proof of concept or an extended implementation to achieve the anticipated benefits.
With the regulatory world in flux and increasingly more complex, it’s important to recognize regulators are also testing RegTech as part of their surveillance techniques and are sharing learnings across borders. Are your regulatory practices keeping pace?
You don’t know what you don’t know
To capitalize on the emergence of RegTech start by exploring the technology options available to you and the RegTech companies offering solutions across industries. This will enable you to view your regulatory processes through a new lens and accelerate the prioritization of RegTech solutions.
The main technologies currently underpinning RegTech solutions include:• Machine learning for predictive modelling, transaction classification fraud detection. • Optical character recognition (OCR) for converting type, handwritten or printed text in images and scanned documents into a computer-readable format. • Computer vision for the analysis of visual features in documents. • Voice analytics for sentiment, tone and conduct compliance. • Robotic process automation for digital workflows, data collation, and reporting. As companies craft and execute their own strategies, here are a few ways leading organizations are approaching the adoption of RegTech. Review current regulatory processes and output Before embarking on a RegTech solution, companies should challenge the business or regulatory functions to consider these questions. • Is the process still required? Perhaps the output of the process is received from something else, or the risk environment has changed and therefore controls put in to mitigate the risk may not be required anymore. • Which routine processes have a high risk of error or impact? Prioritize these areas for RegTech solutions. Consider first if automation technology could reduce the risk or whether the regulatory process lends itself to high order technology e.g., machine learning.