Before the Global Financial Crisis (GFC), banks could get away with a relatively light approach to compliance and risk management. Compliance policies were most likely in place, yet it was a bank's profits that generally received the stronger focus.
However, since the GFC, the focus on the risk side of the risk/reward equation has been enhanced dramatically. Profits are still important of course, yet, strict regulatory requirements mean that banks can no longer afford to ignore compliance and risk management.
While increased regulatory standards are good for the long-term health of the financial sector and provide protection to the global economy, there is no doubt that the role of the financial services compliance professional has become significantly more challenging in recent years. A new era of regulation
Banks today face ever-evolving regulatory requirements. The number of regulations is increasing year-by-year. The pace of regulatory change has been accelerating since the GFC and is showing no signs of slowing down.
Managing the new wave of regulation, such as PSD2 or GDPR, while also considering third-party risk management requirements and data protection frameworks, has become a significant challenge. Keeping up with the latest regulation and implementing new policies on a timely basis is now a considerably more complex and stressful process than it was in the past.
Fail to comply and the fines can be disastrous for a bank. Furthermore, there is significant reputational risk associated with non-compliance. This can impact client relationships, and have implications for a bank's bottom line.
As a result, the pressure placed on compliance personnel today is discernible. Managing rapidly increasing data requirements accurately, maintaining a robust document management system and implementing new policies is not an easy task.
Add in the fact that enhanced regulatory requirements are increasingly consuming more of a bank's internal resources, meaning there are less resources available for revenue-generating activities, and there is often a level of tension between the compliance department and other departments within the bank.
So, what is the solution? How can banks reduce the time and resources needed to comply with the latest regulations and make the compliance process easier to manage for compliance professionals? RegTech can streamline the compliance process
New regulations require new technologies and as a result of the increased demands on compliance professionals since the GFC, in recent years we have seen an entirely new sector emerge—RegTech. When it comes to creating a more cost-effective, automated regulatory compliance solution, it's the obvious way forward.
As its name suggests, RegTech uses technology to help ease the regulatory burden on financial services firms. Essentially, it helps compliance teams implement new regulations more efficiently. As a result, not only can it make life significantly easier for compliance professionals, but it can also improve profitability for a bank.
By embracing RegTech, compliance professionals can help ensure that a bank will be able to meet its regulatory requirements in the future and protect it from inadvertent compliance failure.
As regulation requirements rise and data and reporting requirements increase sharply, it will become more and more crucial for banks to streamline the compliance process with the help of RegTech.
So, let's take a closer look at how RegTech can assist compliance professionals today and examine the benefits RegTech can deliver. Collaboration and document management
Managing regulatory change today involves an enhanced level of collaboration from multiple stakeholders within an organisation.
Whereas in the past, regulatory compliance was primarily the duty of the compliance department, regulators now expect staff at multiple levels across multiple departments of the organisation to be involved in the compliance process. For example, not only should senior management now be involved in compliance implementation, but there should also be input from the risk management, IT, legal, finance, operations and human resources departments.
As a result, solving today's compliance challenges requires a high degree of collaboration from a vast number of stakeholders.
One key issue that compliance staff face in this regard is that of document management. The process of updating policies and communication materials, across multiple departments and multiple levels of the organisation, is not straight forward.
Up until now, banks have regularly used standard Word or Excel files as compliance documents. Often, these have been edited, shared and amended by hundreds of people. Furthermore, all discussion and key decisions relating to the editing of these documents has occurred via email, making the process of tracking this communication extremely cumbersome. As a result, there's a lack of transparency involved with such documents. Can compliance staff ensure that all documents are accurate?
There are two broad solutions needed here. First, compliance personnel need a system that can trace the review process step-by-step to see who made which documents changes and when. Second, the need for a centralised location for policies, documents, conversations, and emails is a must.
This is where RegTech innovation can assist. State-of-the-art RegTech platforms not only provide a clear audit trail so that the compliance professional can be confident that reports are accurate and that the bank is up-to-speed with all the latest policy changes but they can also provide a centralised document storage location, making the process of enabling regulatory change significantly more streamlined. Data access
RegTech can also be of great assistance when it comes to managing data.
Data aggregation is a core challenge for compliance professionals today, as they strive to cope with rapidly increasing data requirements and strict reporting deadlines. In recent years, increased regulatory requirements has led to an explosion in the volume of data that needs to be managed for compliance purposes.
While extending a bank's IT infrastructure and adding new systems to record compliance data can offer a solution in the short term, in the long term, this simply increases costs and creates an environment in which multiple data sets are spread out over multiple systems, making the data-gathering process harder for compliance personnel.
What banks need is access to a sophisticated yet cost-effective platform that is able to centralise all compliance data and display a firm-wide view of the company's compliance programme that is comprehensive, transparent and accurate.
RegTech facilitates this, enabling banks to digitise their compliance programmes. This can help compliance professionals access aggregated data at a firm-wide level, quickly and effortlessly. Time saved
Another key frustration of compliance personnel is the time wasted in relation to regulatory and internal audit requests.
Without RegTech, many hours can be wasted assimilating documents and data from different stakeholders. To gather information from different stakeholders and then follow up with each participant to collect the required feedback, is a time-consuming process, made more difficult by tight regulatory deadlines.
Compliance staff need a centralised solution that brings the entire compliance function together in a transparent way, highlights key deadlines and keeps everyone on track.
RegTech makes this possible. With the help of RegTech innovation, policies, data, emails and the like can all be accessed easily, saving a considerable amount of time when preparing for the regulators.
Time saved translates to lower costs, which flows through to the bottom line.
RegTech is a win-win solution.
Not only does it ease the burden for compliance professionals, but it can lower compliance costs significantly, boosting a bank's profits in the process. It is the answer to automating regulatory compliance in the future. The ClauseMatch solution
, we have a thorough understanding of the frustrations that compliance personnel face in today's regulatory environment.
We are well aware that the compliance function needs a greater level of automation in order to streamline the process, reduce time wasted and bring down costs.
That's why we developed a RegTech platform that can do exactly that.
Our mission is to bring unprecedented transparency, accountability and efficiency to regulatory implementation and compliance processes. We're aiming to automate the entire regulatory life cycle end-to-end for next generation compliance so that when a rule, policy or control changes, compliance personnel can immediately see how it affects the whole organisation and understand the risks. ClauseMatch
applies deep understanding of the regulatory lifecycle and machine learning to standardise and automate processes and workflows across teams. This can help speed up implementation, reduce costs, and most importantly, demonstrate compliance to regulators.
Our platform is a centralised hub that aids accessibility for all staff. By providing new, easy-to-use tools that replace outdated document management and word processing software, we can make the entire regulatory ecosystem function better for those involved in compliance. ClauseMatch
enables the workflow of documents, by enabling professionals from a bank's compliance, legal, finance, risk management and operations departments to collectively create and edit compliance documents. With a built-in audit trail, it delivers accountability, transparency and assurance at all times. Even when working on complex documentation with multiple stakeholders, it's simple to follow the review process and see who made what changes and when.
dashboard provides clarity and transparency, showing where contributors are at each stage of the policy review, what they are responsible for and when they will deliver.
Our innovative RegTech solutions provides transparency and accountability, and take the stress out of policy management and auditing. Ultimately, our platform saves compliance professionals valuable time and resources. We're aiming to make regulatory reporting for banks fully automated, streamlined and effortless.