The potential benefits of the young and developing regulation technology industry is immense, according to a panel at the FSC Leaders Summit in Sydney.
Bright future for regtech industry
By Ky Chow
The potential benefits of the young and developing regulation technology industry is immense, according to a panel at the FSC Leaders Summit in Sydney.
Regulation technology, or “regtech”, is one of the hottest new subsets of financial technology and while compliance professionals are supportive, they’re also characteristically cautious.
“Across the industry and among our peers, people are genuinely excited about regtech opportunities and we’re looking to adopt them as rapidly as we can,” said Westpac’s Group General Counsel and Chief Compliance Officer Rebecca Lim.
Beyond cost cutting
Regulators are considering the potential for regtech in terms of making compliance more comprehensive, with a focus on preventative measures.
“We do real time monitoring and we do post-trade analytics, which can support us with predicting where concerns are with activities,” said ASIC Innovation Hub’s Mark Adams.
But implementing regtech may be a challenge in itself.
“It may be one thing for a larger institution to think about the change that adopting regtech involves, including the financial and people resource issues.
“But it’s perhaps even more challenging for smaller players... we see that as a role that we could play”.
Vendors such as Jan Kolbusz, the founder of Decimal Software, are unsurprisingly eager for the industry to progress, especially in financial advice compliance.
Keeping up standards
With multiple vendors all designing and using technology in different ways, how easily could Australia define standards for both design and compliance rules?
Mr Adams says ASIC already issues “a plethora of guidelines” around compliance and requirements, but acknowledges technology can make those guidelines more accessible.
Mr Adams also points to European developments of a global regtech organisation developing rules around data and information sharing, as well as conduct.
“So yes, I do think there are opportunities through standardisation.” Mr Adams says.
Westpac’s compliance chief is also cautiously supportive, pointing out the “very varied” backgrounds of regtech tools and vendors, who range from financial services licence holders to other software vendors looking to repurpose existing software for compliance.
“At the moment the standards sit with the industry, they don’t sit necessarily with the regtechs themselves,” Ms Lim said.
“But the more regtech companies can understand that aspect of the business models of the customers, the quicker the adoption.”
This conversation was part of the FSC Leaders Summit in Sydney on July 26, 2017.