Businesses are facing increasing scrutiny from regulators, and with this, the cost to reach compliance is increasingly on the up. RegTech has risen in the past 18 months, promising to reduce costs and improve the overall operations of any organisations.
However, with regulations being global in nature, the lack of alignment is posing the biggest challenge to the industry according to Cohen, general manager of Trulioo. As a result, businesses have to access each market, which in turn, increases the costs and the workload even further.
“When you look at the costs associated with compliance, they are sky rocketing across the world because there is very limited alignment,” he told RegTech Analyst. “When you go from jurisdiction to jurisdiction around the world there are some commonalities and consistencies. However, very often there are individual characteristics which make complying with a regulation in one particular jurisdiction unique from the others. It’s a global economy and a global regulatory market, you have to evaluate each separately.”
While there are some exceptions to the rule, for instance the fourth anti-money laundering (AML) directive, businesses tend to have to look at very ‘individualistic markets’. When organisations grow and want to launch across the world, they have to evaluate the regulations in each market separately.
KYC and AML are causing immediate concerns, but data and privacy regulations such as GDPR, are ‘posing large questions’ for many organisations, not just financial institutions. Despite the regulation impacting the entire organisation, everything from your security protocols to processes, Cohen does see the benefits going forward.
“Long term effects are going to be positive on all sides. Privacy and data protection are key aspects of the way we do business and the way individuals interact with financial services,” he added. “Making these more transparent and more robust is a good thing.”
However, companies need to make sure they have the appropriate technologies in place to automate and streamline processes. In turn, this will help keep compliance costs down.
“The advent of Regulatory Technogoly (RegTech) means that compliance officers and risk officers are now strategic decision makers within an organisation,” said Cohen. “They can help drive an immense amount of value by implementing technology and leading with technology first. Whereas previously, the traditional approach is manual, time consuming and costly.”
In addition to reducing costs, the potential of RegTech is unlimited because it helps so many different aspects of a business, according to Cohen.
“Deploying a new technogoly or offering a service on a global scale are both very hard to do. Implementing these types of technology can help scale and quickly lower costs across the board. It also means they can be centrally controlled but flexible across a global environment. All this helps dramatically and significantly help a business succeed.”
Innovation in machine learning and AI can also play a big role going forward. They can be layered onto a solution and build on the early success of that technology, which will streamline and automate even further.
Headquartered in Vancouver, Canada, Trulioo is an online global identity and business verification solution provider, offering the capability to verify over 4.5 billion consumers and 250 million businesses through a single solution. Trulioo’s global identity services marketplace is used by hundreds of businesses around the world to help meet compliance requirements, reduce fraud, and mitigate risk.
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