Online compliance and regulatory solutions

With fast changing, continously updated and revised financial regulations, RegTech is becoming more and more important to all financial services firms.

The implementation of FinSA, FinIA, the associated regulations, MiFID II, GDPR, new anti-money laundering (AML) directives and other assorted pieces of regulation all add to the in-house compliance burden. FinSA and FinIA will likely be the driver for a comprehensive reassessment on how Switzerland conducts financial regulation in practice, which will mean material changes to the way oversight and regulation is conducted, implemented over the next several years and beyond.

Keeping up with regulatory requirements and managing compliance means using technology to best effect. Recent research shows the RegTech market growing ca. 25% p.a. in recent years with turnover expected to reach 4 Billion USD by 2024. Due to the standardised, largely rules-based approach regulators are taking, which lends itself to a digital approach, more and more financial services firms are using RegTech solutions to manage rising compliance requirements.

The transformational role of technology

New technologies such as distributed ledger, blockchain and artificial intelligence (AI) are playing a transformational role enabling financial services firms to deal with the changes. Where firms use distributed ledger technology to process, validate or authenticate transactions and other types of data exchanges, AI can automate manual processing tasks, reducing the risk of human error, help with more complex decision-making activities such as deal sourcing, as well as market data analysis in due diligence.

Onboarding clients can also be simplified with RegTech. Managing AML and KYC requirements, maintaining the audit trail when onboarding and ongoing monitoring of changes are all needed to satisfy reporting requirements.

Compliance software helps to fulfill compliance requirements efficiently and cost-effectively. Minimising human error and proving to regulators that due diligence has been carried out.

Regulators are also using technology to improve the way regulatory change is communicated and translated into business requirements, proactively promoting and developing RegTech solutions. US and EU regulators are also experimenting with various initiatives which will make RegTech even more central to compliance.

The future of RegTech

Technological advancements that assist financial services firms to manage compliance include ways to address requirements around recording voice and chat messages for regulatory compliance under FIDLEG/FINIG, MiFID II, trade surveillance and further steps towards more uniform regulatory reporting.

RegTech is still new, but as all the developments such as AI, big data, blockchain and voice control mature and become more powerful, RegTech will develop to be a central pillar of the financial services industry support structure.