RegTech – the use of new technology to deliver regulatory requirements – is not quite Robocop and ASIC is saying it can actually help the financial services industry with compliance.
“Regulatory compliance and reporting for financial services firms could become more effective, more transparent, less time-consuming and less costly,” said Cathie Armour, commissioner at ASIC, in the Australian Financial Review on 4 April.
And: “Compliance staff will become coaches and educators, rather than in-house policemen.”
Technology can help integrate and simplify compliance, she explained, including automating compliance tasks and improving insights through data analytics.
Armour said RegTech could create an audit trail for surveillance and investigations, and it would be possible to monitor an entire population for issues and flag problems as they occur. Some products might even educate and aim to change behaviour.
And industry might be on the same page with that. In February, ASIC hosted a roundtable discussion on the current RegTech landscape and developments. Mark Adams, ASIC Innovation Hub coordinator, said in a podcast for the event that the feedback was that many in the financial services sector saw RegTech as an opportunity to “move away from a rear-view mirror approach” and for it to “assist in supervision, monitoring and improvement of culture within firms”.
— FinTech (@Fin__Tech) April 10, 2017
Armour notes that RegTech will also help ASIC improve the way it regulates.
“For example, ASIC will be able to deploy Artificial Intelligence technology and strategies to better analyse conduct, detect fraud or other financial crimes, as well as improve risk detection and risk management.”
It can use RegTech to review data about individuals and entities, compare data and monitor trends.
Adams noted in the podcast that there are challenges with RegTech, including the identification and verification of an individual’s digital identity; use and standards around the protection of data; and cyber security.
However, it was recognised that RegTech is something that is important for regulators, he observed. “We need to keep open mind and try to reap the benefits of RegTech,” Adams said. “That can be done in a number of ways: in the way we approach regulation, can we be as technology neutral as possible; we need to be proactive in the way we think about the uses of RegTech, including the use of trials. And the last bit is how best we can promote, inform and support collaboration with industry to nudge the use of RegTech in current risk management and compliance implementation.”