To keep pace with an ever-changing marketplace where compliance is never far away, the spotlight is shining on innovative technologies within financial services, and FinTech has spawned a sister technology – RegTech. RegTech is hot on the investment list for organizations across the globe and is now the target of many industries, from financial services and banking to, retail, insurance, gaming and healthcare. Research has suggested that the global sector is set to reach USD 87.17 billion by 2028.
Against that backdrop we ask, what’s new this year?
IBA is very much in the privileged position to be working with some leading B2B clients in the RegTech sector spanning insurance, lead generation and medical devices. We’ve seen first-hand the business benefits technology can bring. So, here’s our breakdown of how RegTech is taking the financial services industry by storm today, and into the future:
- Reaching compliance with a digital helping hand – portals take the spotlight
The land of compliance and regulation can be quite the headache for organizations and resolving issues can be an arduous and resource-consuming task. Research by the Competitive Enterprise Institute suggests that the average cost of compliance maintenance can tally up to a hefty $10,000 per employee – indeed a huge ongoing cost, but a small price to pay compared the humongous price-tag of missing compliance deadlines.
Digitizing the process can help organizations maintain regulatory compliance, while reducing costs and providing great CX. Start-up Clausematch has used its deep understanding of regulatory compliance and machine learning (ML) to automate processes to provide a clear audit of compliance, reach deadlines and reduce compliance costs by as much as 30%.
But it’s not just start-ups that have turned their regulatory hands to the compliance market. Our insurance client is a multibillion-dollar NASDAQ listed company and has introduced a personal injury platform, fully integrated with the Official Injury Claim portal set up by the industry itself. All small claims up to a certain limit must be processed through the portal – helping insurers manage the impact of new regulations – and that includes new FCA price 2022 rulings.
- Why Knowing Your Customer (KYC) is more important than ever
In the financial services industry, knowing your customer is vital. In fact, it’s now a crucial regulation for fighting money laundering schemes. KYC processes involve a customer’s identity, financial situation, and risk – fundamental information for ensuring an organization doesn’t fall victim to fraudulent activity.
One sector that has been at risk of falling victim to fraudulent activity is the online lead generation space – a lucrative market but one that is facing increasing regulatory scrutiny from industry bodies. As industry regulators tighten their grip on lead-gen and advertising practices, , insurers and brokers that purchase, handle or action these fraudulently generated leads can also find themselves liable for punishment.
Our client is at the forefront of developing a digital platform for lead certification, championing a ‘gold standard’ for data provenance, helping businesses certify online leads and steer clear of misleading advertising, the reselling of consumer data and impersonation of respected brands.
With RegTech, some would say that financial organizations have the most powerful tool for fraud detection. Here, artificial intelligence (AI) can take the spotlight. My eye was caught by RegTech provider ComplyAdvantage and its AI driven risk management database that can update 30,000 KYC profiles in 24 hours.
- It’s all in the data! And Reg Tech should protect it all – no matter the industry
While knowing so much about your customer has its benefits, it also comes with a new level of responsibility—and effective data management to ensure safety and confidentiality will be paramount. RegTech organizations can provide value-added services as a result of their big data capabilities, and this is where organizations can entrust ML to do the “dirty work” instead by correlating multiple sources of the truth into one. With the help of AI, organizations can not only collect necessary datasets and classify them, but they can also form reports according to the established regulatory standards.
And here’s where we are seeing RegTech move beyond the financials. Take government and in particular, defense contracts. Our aerospace and defense enterprise software client is at the forefront of this for its manufacturing customer base, many of whom support governmental contracts that require granular financial reporting and compliance. Its cloud-based defense contract management functionality helps harness and display critical data to provide the visibility demanded by some of the world’s leading defense organizations.
Now let’s move to a radically different market – but equally crucial to reducing risk and safeguarding individuals. For our client operating in medical device enterprise labelling, their pioneering software is designed to bring all artwork and labelling into one system, to make sure manufacturers never miss a compliance deadline again – and with upcoming IVDR deadlines looming in May 2022, organizations must look to RegTech sooner rather than later.
- Who are you? Identity theft is on the rise
For the financial services industry, security threats are already extremely high and with the opportunity for new technology, these threat numbers only increase.
But protecting your own organization is just half of the job – since 2019, nearly half of U.S. consumers have experienced identity theft, meaning accurate customer identification is more important than ever.
Long-gone are the days of passwords, PINs and codes. Forward thinking companies have jumped full steam ahead into the new digital. Some banks are even using biometrics – body measurements and calculations, to verify identities. Barclays are a good example of this – by partnering with Hitachi, the organization has been able to offer next-generation finger vein scanners for corporate customers, which is an even safer form of identification than the standard fingerprint.
Again, we’re there for one of our clients where AI powered Speech Analytics and Conversational Intelligence, its software can detect hesitancy in voices when making financial claims.
Getting compliant, data-savvy and smarter against risks with RegTech
The scope for RegTech is clear to see – and the benefits can be felt far beyond just the financial services sector. With the RegTech global market expected to make such progress in the upcoming years, AI, ML and digital processes will all be vital technologies for organizations looking to reach compliance deadlines and ensure safety for both their businesses and customers.
Georgia Harris is PR Executive at IBA International.
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