The Role of RegTech in Banks’ Digital Transformation
Financial services firms have recognized digital transformation as a means to ensure compliance with regulators. Due to expanded offerings from RegTech firms, transforming how financial service firms manage their regulated data has never been easier. Financial services firms will continue to increase investments into RegTech firms that offer data management transformation, back-office automation, modern technologies, and a reimagined workforce to limit their future regulatory compliance exposure.
Options to work with third-party providers, such as Infobelt, can offer fast deployment options. With every financial institution looking to drive operational efficiencies, it is more important than ever to understand how much data they have, how many hours it takes to manage it, and how the regulators might use it.
Each organization will need to determine what works within the parameters of existing and desired business models. Traditional financial institutions will feel increased pressure to act quickly and decisively regardless of the selected path. Here are the most critical digital banking trends impacting the adoption of RegTech.
Keeping up with Regulators Data Technology
Regulators continue to improve their capabilities with the use of AI and other data aggregation technologies, such as Supervisory Technology, also known as “SupTech.” SupTech is described as the use of technology by supervisory and regulatory agencies to improve efficiency in their duties overseeing industry. As the adoption of SupTech increases, so does a firm’s vulnerability in exposing non-compliance. A recent paper published this past December by BIS noted
Reinventing Data Management Processes
“The key for financial services firms to ensure compliance is to have all the necessary information that a regulator may require,” says the Chief Operations Officer at a leading RegTech company. “Sure, regulations are changing, but what changes more often is what regulators look at to ensure compliance.” Not only is it essential for banks to know what data should be retained, but it’s also imperative that they know precisely where it is. Relying on outdated data management processes will only continue to hurt financial services firms. By reworking their current data architecture, firms can automate processes to capture regulated information in one place where it can be indexed and retained for any required amount of time.
A Changing Workforce Increases Data Capture Needs
The need to transform digitally will be crucial in managing remote work’s success. The firms that can adapt how their regulation information is captured will be better prepared for information requests by regulators. Gartner reports that between 2016 and 2019, nearly 75% of the required job skills had changed by more than 40%. The use of new technologies has driven the need for new soft skills. Gartner says that financial institutions need employees who can collaborate, innovate, adapt, and persevere through business disruption, not to mention that close to 75% of financial services firms’ employees will continue to work from home in 2022.
Consumer Insight Will Be The Differentiator
The fuel that powers digital banking transformation is data and analytics. In 2022, customers will increasingly expect their financial institutions to know, understand, and reward them in real-time. Using internal resources and partnering with firms like Infobelt, financial institutions can replicate the intelligent experiences their customers have become accustomed to with Amazon, Google, Netflix, and others.
In conclusion, financial services firms must embrace transformation and keep pace or get ahead of technological change and data management to remain compliant and competitive. Internal modernization provides broad advantages and responds to marketplace needs. To streamline back-office operations and make more informed business decisions, financial services firms can take the lead from FinTech and big tech organizations. As data is centralized across the organization, the information can be analyzed to create a better experience for their customer base.