The Financial Services Industry is one of the most dynamic, evolving industries. It Is equally one of the most vulnerable. Regulating and empowering this sector without the use of innovative compliance technology has become an almost impossible task in today’s quickly changing world. The need of the hour for financial institutions is to implement technology that overhauls existing compliance systems and injects much-needed efficiency, speed and clarity. 

The answer? Compliance automation through Regulatory Technology or RegTech. RegTech, a subset of FinTech, is transformational technology that uses front-line innovation – from artificial intelligence (AI) to natural language processing (NLP) – to manage regulatory processes that are historically clunky and labour intensive. For financial institutions such as banks, compliance is key. Fines for non-compliance can be eye-wateringly high – even for billion-dollar institutions. 

However, staying compliant is not an easy task, even with technology. Thankfully, the industry has seen a surge in pioneering companies that lessen the regulatory burden. One such company is CUBE, which leverages a digital regulation platform (DRP) to scan the length and breadth of regulatory change and subsequently uses AI and regulatory intelligence to map changes to an institution’s compliance framework – ensuring they keep up to date with every regulatory change, no matter how small. 

Companies such as CUBE are enabling businesses to streamline their regulatory and compliance processes – making them smarter, faster and more efficient. The benefits of RegTech are far-reaching and have the potential to transform practices across the length and breadth of industry. The top advantages of adapting RegTech, from an enterprise growth perspective are:

1. Risk management

RegTech change management platforms allow for advanced data insight and ensure comprehensive horizon scanning. Financial institutions are better able to anticipate regulatory change and potential challenges. This enables them them to manage risk, prepare effective business continuity plans and take positive, rather than retrospective, action.

2. Efficiency

Legacy processes and systems, especially within financial institutions, are often labour-intensive and ineffective. We’ve all heard horror stories of teams spending hours, or even days, managing false alerts or erroneous data. RegTech platforms offer automated compliance systems that remove clunky processes, reduce false-positives and ensure firms receive relevant, actionable alerts. This frees up time and resources that can be better spent on ensuring regulatory compliance, rather than on patching holes. 

3. Customer trust

Customer trust and loyalty is at the heart of any organisation. When firms fall foul of the regulator, they face punitive fines and bad publicity – which can be potentially ruinous for reputation. Understandably, customers are put-off by institutions that exercise bad practice or illicit activity. The use of RegTech systems can significantly reduce the likelihood of non-compliance – from cybercrime to money laundering – meaning that firms retain loyal customers for the long term.

4. Cross-sector Adaptability

RegTech is traditionally rooted in technology but has the potential to be used across myriad industries. Commodity companies, law firms, human resources and even the healthcare sector have embraced elements of RegTech to ensure they are complying with their relevant regulatory obligations. RegTech has already transformed financial services, but may also have the potential to change the world.

Conclusion

Efficiency, speed, integration, and transparency are just some of the benefits of adapting a RegTech platform. Where once it was simply an advantageous addition to existing compliance frameworks, RegTech has quickly become a necessity across the financial services industry. Firms who fail to invest in RegTech might soon find themselves lagging behind their peers and falling foul or regulatory expectation.