{"id":6987,"date":"2023-01-12T15:24:00","date_gmt":"2023-01-12T15:24:00","guid":{"rendered":"https:\/\/iqeq.com\/?p=6987"},"modified":"2023-08-16T15:17:01","modified_gmt":"2023-08-16T15:17:01","slug":"regtech-adoption-accelerating-fast-whos-driving-seat","status":"publish","type":"post","link":"https:\/\/iqeq.com\/insights\/regtech-adoption-accelerating-fast-whos-driving-seat\/","title":{"rendered":"RegTech adoption is accelerating fast, but who\u2019s in the driving seat?"},"content":{"rendered":"
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There is no mistaking the accelerating upward curve of technology placement in regulated environments. According to\u00a0<\/strong>Bloomberg UK<\/strong><\/a>, the global market for regulation technology, commonly referred to as \u2018RegTech\u2019, will be worth $55 billion by 2025. So what is driving the growth in RegTech adoption?<\/strong><\/p>\n

What seems clear is that there is no single driver, with regulators, investors and future-focused firms all playing their part for a number of reasons. In this article, I\u2019ll examine the multiple factors behind the growing role of RegTech.<\/p>\n

The liability of legacy processes<\/h2>\n

Where there\u2019s an absence of RegTech, high administration and labour-intensive manual processes are a cause of concern for many companies because of the number of associated risks \u2013 from inaccurate data due to human error, to increased exposure to corruption and fraud; from lost documents and incomplete audit trails, to the inability to track and analyse trends over time.<\/p>\n

RegTech is key to keeping up with ever-changing compliance regulations and managing the risk of a violation. Outdated processes, like back-and-forth emails and repetitive form submissions, simply can\u2019t keep pace with the speed of change. According to\u00a0Kofax\u2019s<\/a>\u00a0research, average investor onboarding processes take about 41 days to complete. This delay costs time, and with it there are significant downstream complications, including investor churn and missed investment opportunities.<\/p>\n

The difference in efficiency between manual compliance processes and RegTech is being noted across the industry. Investors are questioning managers who don\u2019t use RegTech, and, as a firm, if you can\u2019t demonstrate your controls at the touch of a button to an auditor or regulator, it raises a lot of questions as to what else you\u2019re not doing in an organised fashion.<\/p>\n

Equipping a modern workforce<\/h2>\n

When traditional methods are discussed, so too is staff morale. Repetitive, administrative tasks take their toll when your team could be working on far more important projects. From research conducted by the\u00a0FCA<\/a>, we know that there is a net satisfaction of 95% for businesses who implement RegTech.<\/p>\n

Businesses are recognising that the key to success is a combination of robust systems and qualified people.\u00a0And when talented employees are handed modern tools to complete their work, firms have a better chance of retaining them.<\/p>\n

Sharing the load<\/h2>\n

Given the extent of the compliance burden facing financial services firms these days, it\u2019s no surprise that they\u2019re increasingly looking for outside help to adhere to the current demands, as well as what additional expectations might come down the line.<\/p>\n

The growing trend of outsourcing components of back- and middle-office operations is further driving the use of RegTech. If your firm makes a decision to partner with specialist providers, it\u2019s commonplace for them to utilise specialist systems, so as an outsourcer you benefit from expertly trained users leveraging tech on your behalf, as well as not having the outlay or hassle associated with onboarding additional service providers.<\/p>\n

The market is not short of supply of RegTech solutions compared with ten years ago, but\u00a0you need to choose carefully<\/a>. Many platforms promote their ability to help with regulatory compliance, but there will always be a point on the delivery spectrum that highlights limitations. Where do responsibilities begin, end, or become grey? Forward-thinking firms should assess core priorities and lead searches based on that list, in that order.<\/p>\n

The impact of legislation<\/h2>\n

Legislation in the UK and EU is now making individuals personally accountable for the compliance failings of firms, adding significant impetus to ensuring things are done correctly.<\/p>\n

Penalties are already being applied \u2013 for example with the UK\u2019s\u00a0Senior Managers and Certification Regime<\/a>\u00a0(SMCR), which holds senior managers accountable in all UK regulated firms, large or small. In this context, as a senior manager, if you don\u2019t choose to utilise the RegTech tools available in the market, you\u2019re putting your own neck on the line. You are the risk!<\/p>\n

Sensible and appropriate options to mitigate risk are within reach right now. That\u2019s not to say that by \u201cjust buying something\u201d you\u2019re safe from accountability \u2013 in fact the opposite.\u00a0Senior managers leading significant functions need to demonstrate they have taken all reasonable steps with robust evidence.\u00a0It\u2019s important to find the right balance between systems and expert people to ensure ongoing compliance.<\/p>\n

Investor expectations<\/h2>\n

Beyond industry regulations, the surge in RegTech is primarily being driven by investor expectations. Across the board, investor expectations for a seamless customer experience via technology-based services are rising. The Millennial and Gen-Z generations have been pushing for this shift to digital compliance processes, but seasoned investors are equally (if not even more) concerned about digital access.<\/p>\n

RegTech allows firms to differentiate themselves from their peers to attract capital, as well as achieving the necessary compliance, which is putting pressure on more asset managers to make the shift to compliance software. According to The Global City\u2019s research, 68% of respondents said regulated firms need to adopt RegTech as part of their supervisory process.<\/p>\n

Roubini ThoughtLab\u2019s Wealth and Asset Management 2022 report shows that investors are looking to manage their money the same way they shop, socialise, communicate and learn. At IQ-EQ, our own\u00a0MaxComplyTM<\/a> user feedback has shown us that user journeys sit right at the top of the list for what people want from an advanced digital compliance platform.<\/p>\n

Digital onboarding: getting that first step right<\/h2>\n

Digital onboarding is among the most critical areas of RegTech, with the UK\u2019s Financial Conduct Authority (FCA)\u00a0recently noting<\/a>\u00a0that after the pandemic, an increasing number of firms turned to KYC digital onboarding checks for remote customers. The rise of digital onboarding has also been reflected in Financial Action Task Force (FATF) guidance, citing that it could enhance customer experience, increase levels of security and lower risks compared to traditional procedures.<\/p>\n

RegTech has the power to shorten investor identification and verification to approximately 15 minutes \u2013 compared with a process that historically could have taken weeks, or even months.<\/p>\n

Talk to IQ-EQ<\/h2>\n

The cultural shift to tech-enabled investor onboarding has arrived, and IQ-EQ can help keep your firm competitive with MaxComplyTM<\/sup>.<\/p>\n

Contact our team today<\/a>\u00a0to learn how you could benefit from the world\u2019s leading risk and compliance workflow technology.<\/strong><\/h4>\n

Dev\u2019s insights were recently published as part of a RegTech feature in BL Magazine.\u00a0<\/em>Click here to read the article<\/em><\/a>.<\/em><\/p>\n <\/div>\n<\/section>\n\n

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Meet the author<\/h2>\n
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Dev Sian<\/h3>\n

Director, MaxComply, UK<\/p>\n

<\/div>\n

United Kingdom<\/p>\n \n Send email <\/a>\n \n +44 7887 535 004 <\/a>\n

\n \n LinkedIn<\/span>\n <\/a>\n <\/div>\n <\/div>\n<\/div> <\/div>\n
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