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Innovation to Manage Risk & Compliance Across the APAC Region


Summary from Keynote Interview, RegTech Summit Europe, 14th September ‘16:

Ruth Wanderhofer, Citi Transaction Services
Lara Warner, Credit Suisse

Interviewed by: Mark Tantam, Deloitte

Mark – "What are the major challenges currently facing the development of the RegTech sector?"

Lara – "Not all regulators are actively talking about where technology is going and how quickly it’s developing. As soon as you put a technology system in place, you lose the sense of where a risk sits within the banks – so there is a level of concern underlying the enthusiasm around RegTech. Also, we are seeing very specific, single-point solutions from a variety of providers; but It would be unusual for me to find a problem only in KYC, or only on one transaction. The issues we face are around an amalgamation of risks, so I need to understand how all of those solutions come together - how we can aggregate all of the available solutions so they are meaningful and prevent risks within the bank."

Ruth - "The regulatory landscape is already complex, and there are many regulations which conflict with one another. Given the raft of incoming regulations, RegTech solutions need to understand that there will be new risks that people haven’t yet anticipated; and new technologies could even introduce new risks themselves. The challenge will be for the space to grow with the changing regulatory environment. Not all of the solutions we’re seeing today will be deployable in the long-term. Also, we will always need humans to make value judgments – finding the perfect balance is a challenge."

Mark – "How do you anticipate the compliance function will evolve over the next few years?"

Lara - The next generation of people working in our industry must be comfortable with using technology. The role of data scientists is critical - in 5 years’ time, the average compliance organisation will have fewer people and will focus more on preventive and advisory issues. We are also working on ways of engaging people to naturally behave in the way we want them to behave, so they remain compliant, rather than just focusing on detection and discipline. Behavioural analytics will be a good way to do this going forward. We will increasingly need real-time data and technologies that measure how we’re doing, so we can evidence this to regulators and to ourselves, and solve the capital problem that banks have."

Mark – Which areas do RegTech solution providers need to focus more on?

Ruth – "There’s a lot more work to do at ground level in the area of digital identities that we can control. Also, we need reporting templates that have been agreed with regulators, to make sure that the products we are developing today, for use in the future, will be compliant."

Lara – "On the compliance side there is a lot of discussion around how to monitor and find risks in our business; but when new regulations arrive, companies first try to understand the necessity of impact and how deep the risk is in their firm. This ‘preventive’ side needs more focus – banks need to ensure they have the systems and technologies to help individuals to be compliant – that’s a challenge where I haven’t seen much technology and innovation. Also, banks struggle with measuring our operational risk health in real-time, as do the regulators. Operational risk will be the risk to manage in banks over the next 5 years. If we don’t pay attention to it and fix the issues now, we will spend more money in the long-run, as we will add additional layers of risk on top. Operational risk will be a fascinating space for innovative solution providers to focus on."

Mark – "What is needed to drive forward the development of RegTech?"

Ruth – "Collaboration is one of the most important aspects that will drive forward this space. We need multi-disciplinary teams of people who understand how the banking, technology and regulations work, and how they interact together."