What is RegTech?
RegTech is the term commonly used for technology that improves compliance and regulatory processes. This can be as wide-ranging as regulatory reporting, monitoring/validation/verification of identity and transactions, risk management and compliance. Successfully deployed RegTech can improve productivity, efficiency and overall safety of the financial and business system.
Sometimes the terms FinTech and RegTech are confused. While FinTech is firmly linked to financial services technology, RegTech is sector agnostic and may be applied to any regulated industry vertical.
Where does RegTech fit in?
Financial services is the largest sector of Australia’s economy contributing around $A140 billion to gross domestic product each year. It has become our major driver of economic growth and employs around 450,000 people in Australia. The now Prime Minister, Scott Morrison told a G20 conference in Germany last year that governments around the world must use emerging regulatory technology, or ‘RegTech’, to reduce compliance costs and echoed this at the FinTech Australia Intersekt Conference in November 2017. And according to Juniper Research, by 2022, we can expect to see $76 billion invested into RegTech solutions.
RegTech is also critical for regulators. In a speech delivered to an Australian Senate Committee earlier this year, James Shipton, Chair of the Australian Securities and Investments Commission (ASIC), told members that Australia can lead the way when it comes to RegTech adoption.
According to Boston Consulting Group in their FinTech Control Tower report, Australia is positioned third in the world—behind US and UK with the highest number of RegTech companies—and leads APAC as number one.
Successfully deployed RegTech can improve productivity, efficiency and overall safety of the financial and business system.
About the RegTech Association (RTA)
With a clear vision to make Australia a global leader in building higher performing, ethical and compliant businesses through RegTech innovation and investment, The RegTech Association was founded in 2017 as a non-profit organisation that focuses on what is needed to support the growth of the sector and to accelerate RegTech adoption. RTA has 58 organisational members including the Commonwealth Bank, CSIRO Data61, Toyota Finance and Equifax to name a few.
The focus of the RTA’s work is collaboration, education and having the right conversations to improve the opportunities for RegTech to be adopted by regulated entities.
Since its establishment in 2017, RTA has collaborated on many industry-led initiatives including:
- RTA’s #Accelerate RegTech Conference
- RTA’s RegTech Boot Camp program
- RTA’s RegTech in the Bag
- APRA’s Data Collection Solution round tables
- ASIC’s RegTech Liaison Forum
- ASIC RegTech Showcase
- AUSTRAC RegTech Showcase
- New Payment Platform Forum #COLLABNPP
- NSW Government RegTech Seminar
- Westpac’s Innovation Challenge
- Sibos 2018 partner
In the short run, RegTechs can deliver operational efficiencies while simultaneously enabling the sector to cope with the pace of regulatory change. Between the findings of the Cooper Review and the pending final recommendations of the Royal Commission, there is no doubt that change is afoot.
The question is ultimately, how will the sector accommodate those changes? RegTech aims to take the opportunity to rethink how compliance operates.
In other sectors, RegTechs are already lowering onboarding costs, automating and supporting second compliance tasks and tackling conduct issues. The technologies used range from artificial intelligence, natural language processing, smart software-as-a-service platforms, through to blockchain and new generation data verification options. But they can only do this when the regulated entities are ready to rethink the status quo.
Improving the member experience
Proposed Government reforms around Open Banking and the Consumer Data Right present super funds with the opportunity to synthesise the banking and savings patterns of their members – with their permission. From 1 July 2019, super funds will be able to access banking data. Talking to the RegTechs who support Open Banking would seem to be a strategic priority for super funds. This is such a crucial opportunity to support Australians to become smarter about their overall finances.
Following are some examples of RegTech companies exhibiting at the ASFA Conference:
Arctic Intelligence is a RegTech business that enables audit, risk and compliance ‘as-a-service’ through technology. They help their clients manage financial crime risk exposure through their platforms. Their clients are of different sizes, sectors and geographies including Western Union, Suncorp, CUA, TAL and Deloitte.
Software replacing the quagmire of spreadsheets and specialist systems involved in prudential, financial reporting and stress testing. Enteruptors work with global financial institutions large and small to drive down administration costs around risk, compliance and strategy with increases in staff capacity as high as 60 per cent and improved levels of compliance.
GRC Solutions are leaders in governance, risk and compliance training. GRC Solutions works closely with financial institutions to recognise compliance training gaps and meet regulatory obligations through their innovative e-learning platforms and fully tailored learning topics.
Mainframe Cloud exposes mainframe data and other business critical information via a RESTful Gateway. By natively exposing the underlying data, Mainframe Cloud enables digital applications to be developed rapidly in modern languages – negating the need for legacy code.
Managing complex, critical business documents with ease. Eliminating the risks, costs and inefficiencies associated with the traditional authoring, review, engagement and publication processes.
Verifier gives consumers the option to use their employer’s superannuation guarantee contributions or their pay records to prove their income online.
As part of a document digitisation process, WordFlow retrofits classification to every webpage, thereby allowing major bank and insurance customers to instantly identify which pages in their policies & procedures are impacted by a given regulation.