The way financial institutions manage risk and regulatory compliance is changing thanks to new digital technologies. That said, merging and integrating technologies requires collaboration across all stakeholders, particularly between banks, regulators, RegTech companies, and consultancy firms.
To explore this topic, Apiax joined the RegPac Revolution’s The need for collaboration in the RegTech ecosystem panel to delve into the underlying intricacies of public and private collaboration in the RegTech landscape.
The webinar also examines the shifting dynamics of data collection and the regulatory paradigm and discusses the critical components of current gaps, desired outcomes, and the tools required for successful partnerships.
Changing dynamics of data and the regulatory paradigm
With continued government financing and private investment in research and development, RegTech has the potential to have far-reaching implications. Data is only growing in size, and the financial industry’s ability to govern it is becoming more complex.
“All data comes down to structured and unstructured data,” says Linda Jeng, Chief Policy & Regulatory Officer at Centre. “All regulators have a defined procedure for managing structured data. Unstructured data, on the other hand, is very burdensome. Hence, strong collaboration among crucial data stakeholders can expedite operations and make things simpler”, she added.
Many businesses are investing heavily in data optimisation to fulfil legal obligations, as well as embracing new technologies to extract value from their data. RegTech has enormous potential to help organisations control costs and reform compliance responsibilities.
“Unstructured data is very burdensome. Hence, strong collaboration among crucial data stakeholders can expedite operations and make things simpler”Linda Jeng, Centre
Angus Moir, Head of Data Collection Transformation at the Bank of England, highlighted the importance of collaboration and data management. “Collaboration amongst key stakeholders can make the process of data collection and analysis much easier and more efficient. It can assist bridge the gap between service gaps and increase service quality”, he added.
When done manually, sending data and information to regulators is a complex and labour-intensive reporting technique that can lead to inaccuracies. Differences in methods or technological requirements can also obstruct effective reporting for multi-jurisdictional organisations.
Only within a genuinely collaborative framework can contemporary technology successfully assist sectors in sharing data, audits, and conclusions with compliance officers. This requires rethinking how the private and public sectors interact on regulatory issues, shifting from a producer and consumer dynamic to one based on the use of RegTech software.
“Collaboration amongst key stakeholders can make the process of data collection and analysis much easier and efficient. It bridges the gap between service gaps and increase service quality”Angus Moir, Bank of England
Therefore, collaboration is the key to a more progressive, RegTech-driven future that goes beyond the public and private sectors. It also incorporates regulatory procedures and a stakeholder-led strategy that considers the needs of consumers, workers, local communities, shareholders, and suppliers whose outputs drive global supply chains.
Existing regulatory gaps hindering collaborations
Striking a balance to solve regulatory concerns is far from straightforward, and the argument over strategic versus tactical solutions continues.
Cyril Okoroigwe, CEO of RegTech Africa, believes that the ecosystem requires stakeholders to align more. “The existing system is quite fragmented and all parties such as regulators, technology providers, and others must engage in establishing an efficient ecosystem”, he shared.
Meanwhile, Alan Blanchard, Apiax’s Head of Business Development, says that when it comes to collaboration, there is no discrepancy in the calibre of the individuals engaged. “The problem arises when you ask individuals for their time and companies for their resources. All of these gaps, however, are bridgeable, and Apiax intends to work with the goal of excellent delivery of embedded compliance”, he explained.
RegTech necessitates the establishment of long-term partnerships and trust between the public and private sectors. With this extension comes increased complexity and the question of who judges what.
Roadmaps to successful partnerships
The panel discusses numerous critical aspects of the desired results and how to create roadmaps for a successful partnership.
Angus Moir elaborates on how productive cooperation is channelled and emphasises how having a shared well-defined goal is critical. “Teamwork can make more sense when everyone understands what they’re doing and why. In fact, more collaboration across multiple sets of stakeholders is the need of the hour, not to modify the regulations’ procedure or quality but to make them more efficient”, he explained.
Cyril Okoroigwe believes that the solution is a collaborative channel where the entire sector—from RegTech providers to compliance officers and regulators—can contribute, consult, and obtain best practices and know-how. “All stakeholder’s interests should be well-addressed, and every stakeholder, including banks, solution providers, central bank regulators, and other important actors, should understand their position”, he continued.
“Collaboration across multiple sets of stakeholders is the need of the hour, not to modify the regulations’ procedure or quality but to make them more efficient”Angus Moir, Bank of England
In the present climate, regulators have an untapped opportunity to collaborate with financial institutions and RegTech providers to create a collaborative partnership. Collaboration between financial institutions and regulators can test and scale solutions more rapidly and at a lower cost and risk. For instance, creating common testing facilities for machine learning-based solutions to automate the management of regulatory effects and change.
It is possible to create RegTech solutions to guarantee that rules and technology fit the capabilities of financial institutions. Only by strengthening this pooled connection can all parties involved guarantee that the market as a whole benefit from the greater trust, consumer loyalty, revenue, and reputation.