Is this the biggest mistake businesses make to live up to their compliance obligations

Kaizen Reporting began life five years ago and has noticed that many financial firms tend to make the same huge mistake.

The credit crunch changed everything. As markets around the world crashed between 2007 and 2009, lawmakers and regulators clamoured to make some significant changes to restore and ensure financial stability.

The result was the rise of laws like the US Dodd-Frank act, the EU’s Markets in Financial Instruments Directive (MiFID) and the European Market Infrastructure Regulation (EMIR) the UK’s Senior Managers & Certification Regime (SM&CR) – laws reminding executives that they were not above reproach for failing to live up to the standard expected of them.

In this brave new regulated world, financial firms face bigger risks than being slapped with a fine by not living up to their compliance commitment.

“What really happens to most firms is that if they get it wrong then, all of a sudden, the regulator starts asking questions, [sending] their management team and their operational teams into a tailspin,” argues Dario Crispini, CEO and founder of Kaizen Reporting, the London-based RegTech100 company offering regulatory reporting services.

Businesses who find themselves in regulators’ crosshairs must devote a huge amount of valuable time and resources to fixing their reporting issues – even for the reports they’ve already submitted – and to upgrade their systems to ensure they avoid falling foul of future regulatory setbacks. Important as these efforts are, they represent time and money not spent on scaling their business, leaving them at risk of becoming a shrinking dot in their competitors’ rear-view mirrors.

And that is when Crispini believes financial firms make one huge mistake. “Firms are getting it wrong because they’re trying to do too much themselves,” he says. “The analogy I have is that if you’ve got a pain in your side, you will go to a doctor or surgeon. You don’t run out and go to the internet and suddenly start to train as a doctor to start self-examining. But that’s essentially what firms do with their reporting.”

And that is where Kaizen comes in. The scaleup has developed a system of testing regulatory reporting compliance by bringing three essential components together: advanced data analytics and data engineering, a deep knowledge of the regulatory requirements and of the market.

“Our whole approach has been designed around keeping the firm confident in their data and reporting and protecting the firm and the individual senior management from any regulatory censure of any sort,” Crispini continues.

You can read more about Kaizen Reporting and the other RegTech100 2020 companies by downloading our summary here.

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