Complex regulatory changes are forcing many companies to change the way they operate. Regulation continues, therefore, driving the strategic agenda. Thus, one of the fastest growing areas is experiencing and, more quickly, the RegTech sector (Regulation & Technology). It is the RegTech Revolution.
As we have already collected in previous entries, RegTech consists in the use of the latest technological advances to solve the problems derived from Regulatory Compliance. It is not a banal task, if we consider the vertiginous way in which normative changes take place.
According to the Cost of Compliance 2018 report published by Thomsom Reuters, during 2017 the average of alerts for daily regulatory changes amounted to 127, according to the following distribution by months and regions:
Tracking of Regulatory updates in 2017 by region (Source: Thomsom Reuters)
The pace and scope of regulatory changes continue to grow and, with them, the cost associated with Compliance. This cost is greater in those organizations of medium and/or small size, which have to meet the same requirements even when their business is more focused and, surely, the risks they face are lower.
Therefore, having technologically advanced solutions that use creativity to face the problems arising from Regulatory Compliance, becomes a strategic issue.
Traditional Approach vs RegTech
When we see the real value that RegTech brings to Compliance, it is when compared to the traditional approach for complying with the regulatory requirements:
Constant updates. The adaptation to a certain regulation has not yet been finished when it is necessary to face a change in it.
Long and expensive technology projects.
Systems always updated according to the new normative updates.
Flexibility and adaptability thanks to the multiple configuration and parameterization options.
High degree of manual work.
Knowledge focused on people.
Simplification and standardization of Compliance processes..
Long and expensive reporting, with a high percentage of manual errors and no ability to reproduce what was sent
Modular systems that allow you to scale according to the needs of the organization.
Agile, simple and automated Reporting.
Historical with all communications sent to the regulator.
Without analyticial capability.
Centralized regulatory information.
Strategy focused on the exploitation of data.
In summary, a RegTech approach provides the following benefits:
- Agility: RegTech solutions provide a degree of flexibility and adaptation to regulatory changes, thanks to the use of disruptive technologies.
- Integration: RegTech solutions are easily integrated with other systems, either internal or external, thanks to their architecture based on microservices.
- Speed: they are highly configurable and parameterizable solutions in order to adapt to the characteristics of each business, the requirements of the different regulations and the specifications of each regulator. This allows adapting to new regulations quickly.
- Analysis: With a strategy based on data, they provide analysis capacity, not only to the Compliance departments, but to the entire organization.
With a new regulatory alert issued every 7 minutes, the only way to ensure compliance is RegTech.