How the coronavirus has affected the RegTech industry

The coronavirus has forced the global economy to grind into a halt. While the RegTech industry is not left unscathed, there are opportunities for those that look.

Dilip Mohapatra, founder of Cognitive View, the RegTech company, is one of the people who have taken notice. “COVID-19 pandemic has resulted in a huge shift in customer’s business priorities as well as technology priorities,” he tells RegTech Analyst. “This has created project delays and lots of uncertainties.”

Of course, governments around the world have taken notice and made attempts to soften the blow of the pandemic. “Regulators will not prioritise the supervision of many reporting requirements and have provided more time to allow firms to focus their resources on critical functions during this period,” Mohapatra says.

There are plenty of examples of that. In Austria the Financial Market Authority has banned some short-selling to prevent the situation from exacerbating and spinning the markets out of control. The European Securities and Markets Authority has relaxed the video communication monitoring requirements set out under the updated Markets in Financial Instruments Directive (MiFID II) during the pandemic. In Australia, where Cognitive View is headquartered, the Australian Securities & Investments Commission (ASIC) has eased some of the investment rules to help businesses survive the market turndown.

However, that does not mean that there will not be difficult times ahead for businesses, including those in the RegTech sector. “In these uncertain times, [the RegTech sector] will need more time to accelerate its growth as its revenue will [be] seriously hit,” Mohapatra says. “Many of the initial government stimulus packages have completely ignored the RegtTech startup community.”

That being said, he notes that the current circumstances could create opportunities for RegTech entrepreneurs. “This crisis has also created new opportunities in certain industries and technology areas,” Mohapatra says. “So this huge market shift and the new norm has also created an opportunity for RegTechs to take a step back and come up with its blue ocean strategy and keep investing more in R&D. RegTechs may see some challenges in the near term, but there will be upswing post this and they need to be prepared.”

In a new report, Cognitive View unpacks how it can help businesses ride out the storm. The report highlights many of the risks businesses face as they adjust to the coronavirus outbreak, including everything from how to deal with remote working and growing cybersecurity risks.

The report advises that financial services firms should still monitor and record their calls if they can still comply with regulations. “We expect firms to consider what steps they could take to mitigate outstanding risks if they are unable to comply with their obligations to record voice communications,” the report states. “This could include enhanced monitoring, or retrospective review once the situation has been resolved.”

Cognitive View’s solution can help with that in a number of ways. The first is that it can provide voice mail analysis and customer inquiry prioritisation to enable users to more easily decide which callers should be prioritised.

The startup can also provide insights about the COVID-19 pandemic thanks to it having incorporated data from CORD-19 into its machine learning modules. CORD-19, or the COVID-19 Open Research Dataset, is essentially a database of collected data and research from the White House and different leading research groups from around the world. By leveraging the access of this data, Cognitive View is able to help companies to identify and prioritise COVID-19 customer related inquiries.

Another huge risk facing businesses working from home is that cyber criminals are increasingly trying to leverage the pandemic to get access of people’s payment data, customer information or to launch malware attacks. Several governmental bodies including the Federal Bureau of Investigation and the Commodity Futures Trading Commission have warned about this risk over the past few weeks.

In response to the growing threat of criminals taking advantage of the pandemic in order to launch cyber attacks, Cognitive View is also monitoring the regulatory guidelines and Australian Competition and Consumer Commission (ACCC) alerts to understand the scams and incorporate fraudulent behavioural patterns to detect fraudsters during calls into the company’s platform. The company is also closely monitoring any other regulatory changes caused by the virus and will incorporate them as they pop up.

Cognitive View can also help businesses identify early signs of vulnerability in their customers and provide tailored customer service with appropriate levels of care. By tapping into this resource, companies can ensure clients are not mistreated.

Cognitive View is also helping financial services firms to avoid misrepresenting themselves and to clearly distinguish between promotional material and important messages about their products.

Cognitive View analyses customer communication data and identifies if the firms are meeting their own disclosure and terms and condition requirements.

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