RegTech solutions

RegTech, a portmanteau of regulatory technology, refers to systems that ensure regulatory compliance in banking and financial services. Three key areas where RegTech is applied are:

• Monitoring
• Reporting
• Compliance

Whether through a bespoke solution or a platform one, RegTech helps banks and financial services businesses:

• Reduce the need for increasing headcount to maintain regulatory compliance
• Optimize regulatory compliance costs and improve the associated processes’ efficiency with automation
• Identify potentially fraudulent activities in real time and more accurately with predictive analytics and other technologies
• Gain real-time insights into every aspect of operations with solutions for real-time liquidity management, reconciliations and more

With over thousands of RegTech solutions saturating the market it’s increasingly difficult to select the right product. Here are the three key considerations we advise banks to keep in mind when navigating the regulatory technology arena:

• The solution must meet organizational and compliance needs, which depend on the bank’s size, existing software stack and jurisdiction(s).
• It should be in the appropriate price range, taking into account all cost structure components from hosting to management. Costs should be predictable and transparent.
• It should rely on technologies that maximize the solution’s longevity, enable stable performance and ensure compatibility with the legacy estate. It should also correspond to the skills of the in-house management and maintenance team. 

If you envision moving your RegTech estate to the cloud, make sure you take the following into consideration:

• Legacy estate. Analyze whether your legacy estate’s age and technologies may get in the way of migration and review or draft up a cloud and governance policy.
• Data management. Ensure the data will be well governed and secure during and after the move to the cloud. Consider regulations towards security and privacy here as well.
• Vendor. Choose your vendor wisely: Pay attention to aligning the functionality, privacy and security practices with your needs and preferences.
• Jurisdiction-specific regulations. In some jurisdictions, regulatory requirements towards cloud-based RegTech are already detailed and strict. In others, they remain general or non-existent.
• Costs and risks. Estimate not just the migration costs, but also the running costs of your RegTech solution in the cloud. Don’t overlook potential risks and their mitigation routes.

An established trend in the finance industry, real-time liquidity management isn’t an option for banks. Their capability for it is closely monitored by regulators across the globe to ensure the banking system’s resilience and the bank’s compliance with the requirements of the Basel Committee on Banking Supervision (BCBS) 248.

The increased adoption of real-time liquidity management goes hand in hand with the rise of instant and real-time payments, faster cross-border transactions and Open Banking initiatives. What’s more, it’s accelerating these and other trends in the finance industry, becoming a competitive advantage for those banks that go beyond the regulatory requirements.

However, real-time liquidity is also at the root of some challenges banks must grapple with. The definition of real-time liquidity may differ based on jurisdiction, causing a lack of consistency between banks. It also exacerbates obstacles caused by the outdated legacy estate and different conditions across currencies.