According to a 2019 survey financial institutions, especially banks, are falling behind when applying digital transformation to conduct risk management. The current situation shone a light on the lack of technology to monitor employees' activities, regulations, conflicts of interest and conduct risk across organizations. During the pandemic, risk and compliance departments were struggling to manage risks, provide reporting and comply with regulations. All that drove even more attention to the need for RegTech solutions in financial services.
Regulatory alerts warned that many firms were unable to manage and monitor conflicts of interest remotely adequately. It shone a light on firms' ability to analyze an ocean of data that flow through different systems within the organization to predict and identify instances of misconduct—driving the attention of Compliance professionals to implement tools to monitor risks remotely and meet compliance obligations. The recent events and the pandemic highlight how crucial it is to leverage technology in the compliance department, allowing financial services firms to improve conflicts of interest management.
With technology and increased automation, manual processes can be more streamlined and drive efficiencies across the company. Advanced technologies and capabilities such as artificial intelligence, machine learning, neural networks, deep learning among others enable financial services to leverage compliance, extract the right information and cross-reference against other data sources for better risk control. In a time like these, technology is the solution to easy operational challenges and no longer an option, but rather necessary to address compliance.
In general, employee behaviour can be more easily detected if data is collected from different sources and checked (e.g. email communications, call recordings, access logs for applications or databases storing customer or other confidential information, and leave records). However, companies relying upon manual processes or disconnected systems are missing opportunities of a seamless view of what is happening and identify suspicious patterns of behaviour.
Another challenge of managing conduct risk is to find a flexible solution that provides seamless integration to different systems. Some technology solutions tend to be more agile, configurable, and faster to address companies' new challenges and growing needs. Flexibility means that companies will be able to respond faster to new regulations or requirements. Companies should avoid rigid, immovable technology as it can cost more in the long term and tend not efficiently and effectively detect misconduct and monitor conduct.
Besides, a solution should be implemented with the "forward-looking" approach with a proven record of delivery. Technology moves quickly; solutions can't only focus on the past or the present.
But what is RegTech?
Regtech uses regulatory technology through software-as-a-service (SaaS) to help financial services firms comply with regulations more efficiently, reducing the amount of work in compliance processes and operational cost of compliance.
RegTech solutions assist firms to monitor regulations, provide reporting and monitor compliance. RegTech addresses the challenges of analyzing the vast amount of data in the organization to predict behaviours patterns, review a broad set of conduct risk data, furthermore this technology automates the various checks needed to maintain compliance.
RegTech to the rescue
Financial services firms are increasingly exploring how RegTech can help address continuous challenges. Technology is the answer to reduce the ever-increasing cost of compliance, and easy regulatory and reporting requirements; it aggregates by allowing compliance departments to use better data to improve surveillance programmes and review companies' policies.
High-regulated firms of any size need to recognize that introducing technology is the only way to meet the continuing regulatory challenges ahead and keep compliance. MCO make simple to our clients to address the many areas of employee compliance, manage the company's code of conduct activities and mitigate misconduct risk.
This recent case study explains how our platform helped our client to migrate from an outdated in-house system to our solution that enables firms to fulfil their compliance obligations with minimum effort.