As we progress into the new year, it’s important for Chief Risk Officers (CROs) to keep an eye on the latest RegTech trends. By adopting the right technologies, CROs can ensure that their organisation is well-equipped to identify, assess, and manage potential risks and maintain regulatory compliance. The financial industry is going through a process of digital transformation, and CROs need to be aware of how this is changing the way risks are managed. This includes understanding new technologies and how they can be used to improve risk management processes.
Here are 5 top regtech trends to look out for in 2023:
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Product & Service governance
Product and service governance are processes and frameworks that ensure a company’s products and services are developed, managed and delivered to satisfy and meet the expectations of its customers, shareholders and regulators. There are various technology based platforms built to enable CROs establish clear procedures, and standards for the development, maintenance, and operation of products and services. They also support monitoring and reviewing the products’ and services’ performance to ensure that they are meeting the required standards.
These platforms can help organisations manage the development and delivery of their products and services more efficiently and effectively, by providing tools and processes for coordinating and tracking the various activities involved. All the steps of the process are digitised to replace your manual, long and highly complex process. Technological tools are embedded in these platform to capture the complete history of a product, from its inception to its discontinuation, including all events, records, and documents. This information is kept in a secure and consistent format, and can be easily retrieved at any time. Additionally, it allows for real-time communication and connection within the business and helps employees keep track of both products and procedures.
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Auto QA
Quality assurance is a critical step to ensure that a product or service meets certain standards of quality and functionality. It can help improve customer satisfaction, reduce cost, increase performance and efficiency and help your company maintain regulatory compliance. Currently, many financial services firms use human teams to listen to calls and write a combination of objective and subjective assessments to track quality and flag instances that don’t meet expected standards.
Auto (automated) QA involves using AI driven automation at all stages of the QA process instead of completing it manually. This significantly reduces the time taken to complete an assessment and ensure the agent’s effort is spent on the highest value interactions. Platforms like Aveni can help your company leverage Auto QA to gain a higher level of insight, more efficiency and a more holistic review process.
Regulatory requirements such as Consumer Duty have made it necessary for companies to conduct more thorough reviews during the quality assurance process. This includes not only evaluating a single call in time but overlaying that with the past interactions such as emails. Firms must consider how their customers’ circumstances may have changed and what their outcomes have been across their lifetime – this means the number of cases assessors can review will drop dramatically unless there’s some sort of machine automation.
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AI driven data management
Companies can leverage Artificial Intelligence and machine learning tools and techniques to drive performance and efficiency of their data management processes and framework. These AI driven tools can monitor and analyse large volumes of data to identify patterns and trends and can automate various data management activities like data cleansing, data integration, and data governance. These tools can also be used in the process of risk data management: collecting, organising, and analysing data about potential risks to the organisation.
Whether B2B or B2C, there’s always a lot of data involved in the activities of a firm in the financial services industry. Oftentimes, the management of these data is key to meeting or failing to meet regulatory requirements. AI-driven data management can help firms leverage their data effectively and efficiently, reduce time and effort that could have been spent doing it manually, drive accuracy and power general business processes.
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Blockchain and Distributed Ledger Technology (DLT)
Surprised this made the list? Yes, blockchain is generally associated with cryptocurrencies, however, it has other uses and opportunities beyond crypto. Blockchain technology can help firms to improve the transparency and security of risk management processes, such as trade settlement and regulatory reporting by creating secure, tamper-proof ledgers, reducing fraud and bolstering trust in the financial system. It can improve the efficiency of financial transactions and reduce time and effort required to complete transactions by automating various processes involved.
This can be especially useful for transactions that involve multiple parties or that require the transfer of large amounts of data, as blockchains can streamline these processes and reduce the need for manual intervention. Blockchain can potentially improve your firm’s security, transparency, and efficiency which can be instrumental beneficial for your customers as well.
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Open data and APIs
These technologies can be used to integrate regulatory compliance systems with other systems used by financial services firms, such as risk management or customer relationship management systems. This can help firms automate compliance processes and improve their ability to manage regulatory risks.
Open data will also enable firms to have access to the information required to report for regulatory compliance. By making data openly available, firms can demonstrate to regulators and other stakeholders that they are operating in a responsible and transparent manner. It can also help them to stay informed about developments in their industry and adapt their practices accordingly.
The pace of RegTech innovation is rapid and these technology trends are already shaping the future of the financial services industry. For CROs to mitigate and manage risks more effectively in an increasingly challenging economic environment, it’s critical they not shy away from innovation. Those that embed data-driven technologies in the heart of their organisation early, will quickly determine the winners and losers in the industry in the coming years.
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