With the regulatory environment constantly changing, firms are looking towards technology to help. With so many different solutions available, Aveni has outlined the five biggest technology innovations companies should be looking at.
Aveni, a UK-based RegTech company, has outlined the five biggest technology trends chief risk officers need to be on top of in 2023.
Product & Service governance
The first area CROs need to keep on top of is product and service governance. These are processes and frameworks that ensure a company’s products and services are developed, managed and delivered to meet customer, shareholder and regulatory expectations.
There are many technology-based platforms that enables CROs establish clear procedures and standards. They also support the monitoring and review of performance to ensure they meet the required standards.
These platforms allow firms to manage the development and delivery of their products and services more effectively and efficiently, Aveni explained. It does this by giving them tools and processes to coordinate and track the various activities involved.
All steps of the process are digitised to remove manual input and can be used to capture the complete history of a product, including all events, records and documents.
Auto QA
The second piece of technology CROs should be interested in is automated quality assurance. Aveni stated that QA is vital to ensuring a product or service is meeting quality standards, as well as help improve customer satisfaction and reduce inefficiencies.
However, most current QA processes are reliant on humans listening to calls and writing objective and subjective assessments.
An automated QA service leverages AI to conduct the assessment processes and get more insights from the reports. Aveni stated that Consumer Duty has brought requirements for firms to conduct more thorough reviews during the quality assurance process. This means evaluating and comparing historical interactions to assess how the service is catering to needs. Compliance teams will now need to assess how the customers’ circumstances have changed and what their outcomes have been across their lifetime, auto QA makes this easier to achieve.
AI driven data management
The third technology innovations trend is the use of AI and machine learning tools within data management. It stated that these AI tools can monitor and analyse large volumes of data to identify patterns and trends and can automate various data management activities like data cleansing, data integration, and data governance.
Additionally, they can be used for risk data management, including collecting, organising and analysing potential risks to the firm.
Blockchain and Distributed Ledger Technology (DLT)
Up next, Aveni recommended the use of blockchain and distributed ledger technology. It stated that while blockchain is typically associated with cryptocurrency, it has much wider use cases.
By leveraging blockchain, firms can help firms improve the transparency and security of risk management processes, such as trade settlement and regulatory reporting by creating secure, tamper-proof ledgers, reducing fraud and bolstering trust in the financial system. It can also improve the efficiency of financial transactions and automate various processes involved, it said.
Aveni said, “This can be especially useful for transactions that involve multiple parties or that require the transfer of large amounts of data, as blockchains can streamline these processes and reduce the need for manual intervention. Blockchain can potentially improve your firm’s security, transparency, and efficiency which can be instrumental beneficial for your customers as well. “
Open data and APIs
Finally, Aveni urged CROs to monitor the use of open data and APIs. These allow technology to integrate regulatory compliance systems with others, such as customer relationship management or risk management systems. By doing this, firms can automate more of their compliance but also improve monitoring efforts.
It stated that open data also enables firms to get access to the information required to report for regulatory compliance. With this data openly available, firms can easily show regulators and stakeholders they are operating in a responsible and transparent manner.
Aveni concluded, “The pace of RegTech innovation is rapid and these technology trends are already shaping the future of the financial services industry. For CROs to mitigate and manage risks more effectively in an increasingly challenging economic environment, it’s critical they not shy away from innovation. Those that embed data-driven technologies in the heart of their organisation early, will quickly determine the winners and losers in the industry in the coming years.”
Read the full report here.
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