RegTech brings endless possibilities and can benefit non-regulated markets; however, regulators need more resources to help the burgeoning market grow, according to Kristoff Zammit Ciantar, CEO of Aqubix.
With a number of industries struggling with the pressures and challenges associated with reaching compliance, over the last 18 months RegTech solutions have emerged from the FinTech space, promising to turn the regulatory headache into a competitive advantage.
RegTech not only brings with it the ability to enhance regulatory compliance, but also the ability to create opportunities for companies to achieve transformative operational efficiency.
One of the biggest challenges in the today’s market is the revolving nature of the regulations according to Ciantar.
“Compliance and the regulators are always changing. If something happens in the market you have to be able to tweak the risk and the perception of the risks,” he told RegTech Analyst.
“It’s the entire framework, not just how they operate as a company, but also how they operate as a service. For example, the perception of risk for banks is always changing. The ability to tweak your framework is crucial.”
After listening to its clients, Aqubix provides a Know Your Customer portal and GDPR Auto to address two of the biggest challenges in the market.
The KYC portal claims to be the only solution in the market that addresses KYC from an operational perspective. It addresses the full life cycle of the operational challenge of compliance according to Ciantar.
“Companies are trying to tweak their existing infrastructure they have, which becomes quite costly and cumbersome. Adjusting the CRM to the style of KYC isn’t that simple. Regulation is consistently evolving, and the rules are always changing. We are in a lucky position because we have a framework that was built on that basis.”
The majority of companies in the market are focusing on one specific task,the need to become compliance. Aqubix’s GDPR Auto differs by providing a centralised solution that not only automates the operational aspect of compliance from a technical perspective but is also embedded with the required legal counsel to tackle GDPR.
“Obviously, the biggest benefit of RegTech is reducing the cost of compliance and keeping up with regulatory changes. If you have systems automating most of the processes, you don’t need a big team. Another benefit is reducing the risk exposure to an absolute minimum. When something goes wrong, whatever the case, you are alerted instantly.”
Benefits to non-regulated markets
Like many in the market, Ciantar believes that the possibility of RegTech is huge because its benefits are never ending.
Despite Regulatory technology being created to help companies meet regulations, the benefits the solutions bring go beyond compliance and can even be felt in non-regulated industries.
“We are seeing a a lot of requests from companies who are not in regulated markets and have no obligations to adhere to regulatory frameworks. For instance, a certain client wants to use the KYC solution to onboard suppliers, onboard operators etc. They have no regulatory obligations to do that but can see the benefits of having the tool because it simplifies the process and reduces the risk.”
GDPR Auto includes a workflow which helps companies manage data change requests. Whilst the solution was deigned to help with compliance, firms with no regulatory obligation have also expressed an interest in using the solution to manage and fix internal data management processes.
“Creating technogoly for regulated markets creates technogoly which can benefit other markets. The market for RegTech is huge, not just because of the regulatory framework environment, but because it provides benefits to other processes as well.”
Despite the endless benefits RegTech brings to regulated and unregulated markets, adoption from the financial services space is slow.
Cianter admits that adoption has been ‘painfully slow’, with regulatory requirements and changes happening so fast that even regulators are struggling to keep up with auditing the changes on the market.
“It is slow but totally understandable. It takes a bank easily 18 months since first contact to sign off on a solution. Banks are running on legacy systems and have staff dedicated to certain functions, which won’t become redundant, but will have to be re-positioned. The whole process involves a lot of bureaucracy, politics, red-tape and deciding who will be tasked with implementing it. There are a lot of steps which make the process very slow.”
Another issue is that most banks lack an ‘innovation department’ or a person / team who will take the responsibility for a project. This slows down the uptake because there is no stake holder, who’s remit is to make processes more efficient according to Ciantar.
Whilst he has seen an indication from banks that they are set to embrace innovation, he doesn’t feel like there will be a push from regulators anytime soon.
Some regulators like the FCA in the UK are making a difference with the introduction of Sandboxes and other initiatives.
“However, I don’t think that regulators are equipped with enough funding or resources to keep up with new technologies,” he added.
“The lack of certification from regulators for certain technologies is also to blame. One of the biggest factors which comes from our clients is the certainty and validation for technology. That can only come from the regulators and in my personal opinion this would be a massive help to the industry.”
opyright © 2018 RegTech Analyst
Copyright © 2018 RegTech Analyst
