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Innovation to Manage Risk & Compliance Across the APAC Region


Q&A with John Byrne, CEO, Corlytics

We interviewed John Byrne 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.

Regulatory Planning – A risk based Approach

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

Looking at the sheer volume of current and anticipated regulation, regulated firms will have little choice but to leverage technology to help solve their future regulatory tracking, regulatory risk measurement, regulatory planning through to better operationalising regulatory compliance. At some large banking groups, regulatory compliance staff including AML and account opening functions account for 1 in 6 of all staff. Applying more people to these problems is not sustainable. Many new regulatory technologies that go beyond reporting are using artificial intelligence and semantic technologies. These technologies require learning and adoption at each organisation and it is essential that banks acquire these competencies now, as many of these technologies take time to apply across an organisation.

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

It is in regulators interest to improve standards of compliance and conduct within all regulated markets, at the lowest cost to providers possible. It is not in regulators interest to pass a large regulatory cost burden onto consumers, or to increase account opening times beyond 40/50 days, meaning that switching banks becomes practically impossible. If regulators can provide their documents in machine readable form, this will advance the regtech sector greatly. In order to automate and track regulatory change, regulated firms need more regulatory documents to be machine readable. Secondly, some regulators are providing testing facilities and input to new regulatory technology. I think that it is important that as now regulatory risk is an important consideration for any financially regulated firm, that regulators assist and endorse benchmarks and measures that helps the industry overall.

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

The regulatory reporting sector has been well established over a number of years. As regulations are now emerging, where it will be possible to get fined for providing too much as well as too little in reports, this is an obvious pain point that will be addressed by these vendors. However it is the pain points of tracking regulatory changes, operationalising new regulations, the regulatory risk profiling of a firms business and product lines that can fundamentally change a firms approach to regulation. As the consequences of non compliance is becoming ever more severe, a risk based approach might involve assessing whether it makes sense to continue in a number of business areas, rather in just correctly operationalising new regulations across all existing businesses.

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

We need to provide our value add in three main ways: reduction of regulatory risk and consequences, implement new regulations more efficiently reducing the cost and time of compliance and at a strategic level looking at regulatory compliance in certain areas as a key core competency within key businesses.

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?

Given that a lot of the technologies take some time to learn a new business environment, it is essential that the heads of Compliance/heads of risk start working with the Banks innovation groups. There is a need to look seriously at the benefits of new technology beyond the traditional areas of reporting and systems that deal with financial crime. As there will be many technology solutions and projects in this area, the CCO’s office will need to build up capability to undertake large firm wide projects, in order to gain value from these solutions that provide the most benefit.

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

We hope to show how to use a risk based approach to regulatory risk, as the impacts and consequences of non-compliance, become increasingly severe on market participants.