The Intersection of regulation and disruption

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Financial services are one of the most regulated industries in the world. The industries complexities and the need to abide by high demands for compliance are heavily affected by regulation. As regulation shifts, the financial industry must move along with it, suggesting a new need to cope during unexpected changes. Turning regulatory constraints into an advantage by exploiting data in an intelligent way is a necessary pathway to take for asset service providers. When regulation is at its point of disruption, technology can be utilised to address inevitable change and create more value for asset service providers and their clients.

The following factors below suggest key points that intersect disruption regulation in services.

  • A large amount of data is being shared and utilized due to regulatory and reporting requirements. Asset service providers are now faced with countless amounts of data which are difficult to sort-through to gain significant meaning from. The line between the concepts of asset servicing and data servicing are thinning, as clients and firms begin to demand true meaning out of data for focussing solely on main goals such as investment management or advice.
  • As the regulatory environment increases in weight and grows more challenging for asset providers and their clients, the financial industry must move along with it to adapt.
  • Reg-tech, a subset of Fin-tech, are appearing to assist firms to retrieve ‘smart data’ from an overwhelming amount of ‘big data’. This allows asset service providers to filter information easily when gathering relevant data for requests by regulators. Reg-tech will help significantly with sorting ‘big data’ into a more intelligent way, helping firms to become more agile and adaptable to comply with regulatory obligations and minimise the challenge in fulfilling regulatory constraints. The emergence of Reg-tech not only helps firms to be more compliant, but also allows specificity and preciseness in the type of data needed.
  • As the financial industry utilises more data, there is the higher the risk of breaching compliance obligations. Particularly with KYC, AML and check fraud, technology will be helpful for breaking down specific challenges, determining who the customers are and identifying possible AML etc. Essentially, failure to comply with regulation is not an option and there is no competitive advantage in collecting data, but utilising Reg-tech capitalises on data and helps participants to get the most out of their information.

The emergence of Reg-tech and Fin-tech stems from technology, its key role in assisting the complexities of the financial industry and its ability to allow organisations to be more agile and adaptable for compliance and regulatory requirements. To adapt in the financial regulatory environment, embracing and adopting new technology is necessary to bring value to asset service providers, their clients and the overall global market.