Money20/20 Europe: regtech – from here to agility
The shift from analogues to digital – according to Michael Meyer, Middlegame Ventures, during a regtech discussion at Money20/20 Europe – a major European bank he spoke with files over 50,000 pages as part of its quarterley regulatory reporting.
Stage one for regtech is the pretty straightforward benefit that comes from digitising paper based processes. Outlining the other two phases of the digital journey – the rise of the machine and the automation of processes followed, ultimately, by the robo-regulator whereby machines at the regulated and the regulatory bodies speak to one another enabling real-time risk analysis.
Clearly one direct benefit of digitising, automating and streamlining is the opportunity for significant cost cutting. Regulatory compliance is resource heavy and, in addition to the cost and complexity, it can act as a drag on broader business goals.
One doesn’t have to venture far at Money20/20 to hear a discussion about customer centricity and business agility. The burden of largely paper-based compliance processes acts as a real barrier to both of those goals.
Looking beyond compliance is where all of the exciting stuff that regtech can enable will happen. Where regtech isn’t about just cutting costs but helps support financial institutions to better serve customers (eg faster onboarding, customised products and services) without falling foul of regulatory requirements.
Being able to do what your customers want, when they want it and at pace will enable financial institutions to deliver on strategic goals of customer centricity and agility. Happy customers, happy financial institutions and happy (or at least satisfied) regulators creates a real opportunity for a regtech enabled virtuous circle.
Better technology will provide better and more actionable information. As Diana Paredes from Suade noted, in that scenario what regulators ask for can actually be useful to financial institutions and the regulator. Better risk management and improved regulatory supervision can only benefit the broader economy.
It was also noted that regtech can also create the conditions to make compliance and internal legal teams popular and, apart from their own emotional well-being, enabling them to become an active strategic partner to business.
So, perhaps popularity can be added to discussions around customer centricity and agility at the next fintech gathering.
By Lisa Moyle, director of strategy, fintech, FinTech Futures Series (Banking Technology’s sister company)