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RegTech Adoption is the Way Forward for Better Compliance

    

I recently had the privilege of speaking on the session RegTech Adoption – The Way Forward at the 2022 ASIFMA Compliance Asia Conference as part of a panel of industry experts. The conference featured three half-days of info-packed sessions that covered the latest compliance issues and emerging regulatory trends. 

Something that Julia Leung, Deputy Chief Executive Officer and Executive Director, Intermediaries of Securities and Futures Commission (SFC) noted in her opening keynote really resonated with me as very empowering. She mentioned that while there are bad actors out there, as compliance professionals we know how to identify egregious behaviour and excessive risk-taking through a robust compliance framework that provides the necessary checks and balances. 

That theme was carried through on the panel that I spoke on, because RegTech provides that necessary framework that enables vigilance in an automated, consistent, and efficient way. 

We’re living in an economy that’s both global and digital 

When polled during the session about what they feel is the next frontier for RegTech adoption, the audience answered ESG risks and Crypto surveillance. 

 That aligns with what I heard during the panel a Regulator’s Perspective: Looking Back and Looking Ahead. The panelists touched on the importance of ESG issues and risks around Crypto, along with the continued effects of the COVID-19 pandemic. During that session the panelists also highlighted the need to keep risk assessments up to date to make sure you’re keeping up with the rapid pace of change and focusing on risks with the greatest potential impact. 

 Crypto is an area where the rapid pace of change is evident. This is an area where firms are self-regulating, and implementing policies and procedures in advance of the regulators, because they want to be seen by the market as doing the right thing. Crypto also poses a considerable risk for insider trading, which is especially tricky to manage given the nature of the business. Firms today have a need for personal trade surveillance technology for their in-house staff. 

 Read about Crypto Regulations in Singapore and Recent Enforcements and see how MCO helps firms stay ahead of digital asset regulation and avoid conflicts of interest around crypto 

Another consistent theme of the conference was the global nature of compliance today. Firms need solutions that work across borders. And as Felix Chung, Founding Chairman of the RegTech Association of Hong Kong noted, when firms are operating across the world, they must be able to satisfy the regulatory requirements of jurisdictions across the globe as well. 

RegTech is at the intersection of innovation and technology 

If RegTech 1.0 was awareness of the need for regulatory and compliance technology, the way forward is RegTech 2.0, or the adoption of new technology. 

Firms need surveillance software to monitor and mitigate risk. We’re coming out of a very interesting period right now with firms requiring mobile first technology to facilitate their staff working from home. In this environment, firms must invest in technology, like it or not. 

Regulatory enforcement around conduct issues is happening across the region. I suggest that all firms review their technology to ensure that they can stand up to regulatory scrutiny and they’re not being left behind. I’m often asked how to do this. My advice is to start by talking to vendors in the space.  

Find the technology that’s fit for purpose for your firm 

 Simon Young, Head of Compliance, Hong Kong, DBD Bank notes how important it is to align technologies with priorities. Where are the highest areas of risk in your organization? That’s where you should be focusing your time and budget. Regulators want to see all banks go FinTech, but every financial institution has unique business needs, so off the shelf technology alone won’t be enough. Firms need to find RegTech that has the core compliance capabilities that they need plus the ability to be easily customized based on business requirements. 

 And while you’re interviewing vendors to learn about their offerings, assess their capabilities by looking for what can meet those key priorities right now, and also be scalable to meet the needs of your firm in the future. 

 In my work with financial services institutions across the Asia-Pacific market, I’m seeing a move away from in house systems that can’t keep up with the rapid pace of change. Compliance technology comes with built in best practices that can help teams structure their programs in the most effective and efficient way possible.  

 Would you like to learn more about choosing the right technology solution for your firm? Download the white paper Getting IT Done - Optimize the Software Selection Process for the Best Outcome. 

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Better compliance and a stronger organization 

Technology can help you with compliance, yes. RegTech drives operational efficiencies and leads to better compliance. And that’s the key reason for investing in RegTech. But there are also benefits to RegTech that extend across the organization. 

A compliance program with many manual processes leads to both a sub-optimal working experience for employees and lots of room for errors. Implementing and working with multiple systems can have much the same negative effect. I’m seeing firms move away from “swivel chair compliance”, where users switch between multiple and disparate systems. One integrated compliance system with a singular data source provides better outcomes, better reporting and a better user experience.  

 And that better user experience has a direct impact on employee satisfaction. Employees want to work with the latest technology, and they want to work for firms that they see as progressive. Aveline San, CCO at Citi, pointed out that embedding compliance technology within an organization is both a skill set and a mind set. One training session won’t cut it. Upskilling and awareness on how to use technology must be an ongoing component of business as usual. Read more about How Regulatory Pressure is Driving the Need for Compliance Talent. 

 Connect with your local RegTech association 

My advice to anyone who’s in the market for compliance technology? Get in touch with your local RegTech association. They will help you learn what’s out there. MyComplianceOffice is proud to be a certified member of the Singapore Fintech Association and Regtech Association of Australia.  

And if you’re based in Singapore, consider applying for the Monetary Association of Singapore’s Regulatory Technology Grant. As Chivy Chan reminded us during the panel, this is an excellent resource for financial institutions based in Singapore who are looking to enhance their risk management and compliance functions through the use of technological solutions.  

 “RegTech is the secret sauce. Use it to get a competitive advantage” 

—Brian Tang, Managing Director, FinTech Association of Hong Kong 

 Read how MCO’s solutions for helping firms across the APAC region with compliance issues including conflict checks, trade surveillance and material non-public information (MNPI). Would you like to see MyComplianceOffice in action first hand? Let’s set up a demo.