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Innovation to Manage Risk & Compliance Across the APAC Region


Q&A with David Schraa, Regulatory Counsel, Institute of International Finance

We interviewed David Schraa ahead of his session at the RegTech Summit (London, September 2016). Take a look at his view on RegTech and Regulatory Planning. Download the Agenda for the full programme.

1. What key pain points can most easily be solved by RegTech solutions?

We are still working out the full promise of what RegTech can do. The issue is to translate great potential into real applications. The IIF has a working group focused on exploring possibilities. But there’s wide agreement that – if the legal and regulatory impediments to information sharing can be resolved – RegTech could do a lot to make Anti-Money Laundering and Counter Terrorist Finance compliance more effective at safeguarding the financial system and less costly and risky for banks. There’s the same kind of opportunity with surveillance for rogue trading, and lots of other examples.

2. How can RegTech solution providers improve the way they engage and interact with financial services firms?

The IIF has been organising various events to help create dialogue. Over the past year or so, I think there has been a real improvement in the mutual understanding between the startups and the firms. Of course, there are lots of what might be called RegTech applications already being used already. There has been a lot of learning going on, by all parties, and better understanding developing of the potential. The consultants, law firms, and traditional market information providers are also progressing very rapidly.

3. What role should the regulators be playing to promote the adoption of RegTech in the financial services industry?

The UK regulators and a few others are ahead of the pack and are showing the way. The regulators need first to understand the possibilities and then help clear away the obstacles to effective use of RegTech –the impediments to information sharing for AML are a recognised problem, but actually doing something about them is hard. Then the regulators will need to reconsider the way they look at compliance: for RegTech to be effective, financial institutions have to be able to rely upon it confidently, and we’re some distance from the point where they can do that. Regulators need to set standards or perhaps certify approaches to create confidence and reliability.

4. What practical steps does the industry need to take, to ensure the RegTech sector continues to grow?

Different firms are in different places. Some are investing and really participating in the process. Others are sitting back to see what happens. What’s important is for enough firms to take the lead both in talking to the RegTech people to make sure that what they are working on will really help solve the problems banks are prioritising, on the one hand, and, on the other, participating in the regulatory dialogue to make sure that banks are able to use the RegTech solutions that are offered with confidence that they will be found in compliance if they do.

5. How much of an imperative is there for Heads of Compliance / Regulatory Reporting to be looking into RegTech at the moment? Is it a given that firms will increasingly adopt RegTech solutions, or is there still work to be done?

A lot of firms are looking at RegTech with great interest. But more work needs to be done on the tech side to identify what’s really useful and what will deliver effective, reliable compliance so banks that use it. And more needs to be done to find ways to develop standards to give assurances to regulators that RegTech will deliver reliable solutions, again so that banks can rely on them and justify the investments that will be required. It’s also important that the law firms be involved, both to make sure that legal issues are recognised and understood – they haven’t always been recognised in good time – and so they can advise financial institutions on the extent to which they can rely on tech solutions.

6. Why will you be joining the RegTech Summit, and what do you hope to get out of the event?

Like everybody else, I’m still learning about the potential for RegTech and I need to see what the issues are and how the RegTech people propose to deal with them. A lot of dialogue is needed between the industry, the regulators, the consultants, the lawyers, and the tech people, and it sounds as though the meeting will advance that dialogue.