4 Big Challenges to RegTech Success for Financial Services Firms

The emergence of RegTech solutions has been a lifesaver for many financial services firms as the proliferation of data, increasing sophistication of bad actors, and ever-more complex regulatory requirements make compliance more complicated and more costly. In addition to enhanced regulatory requirements, new financial products, greater customer expectations, the move toward 24/7 trading and instant transactions have made effective compliance and risk management even more challenging.

In the face of these pressures, the effective adoption of new RegTech solutions can help to lower costs, increase business agility, and even point the way to the new products and processes that will drive the enterprise of the future. In our previous blog post, “3 Guiding Principles for RegTech Success,” we looked at some of the key areas to focus on for a successful RegTech implementation.

Adopting new RegTech solutions isn’t without its challenges, however. When implementing programs, financial services firms should keep an eye out for these challenges and ways to address them. Here are four challenges many firms confront when undertaking new RegTech efforts:

• Navigating inconsistent regulation: One massive problem is the complexity of the regulations themselves. Not only is there divergence between regulators in different countries, but conflicts can also emerge between regulators in the same jurisdiction, for instance, the SEC and the CFTC. Add a continual flow of new rules and the problems quickly compound.
• Handling the quantity, complexity, and speed of information: We live in the age of data, with volumes increasing at an unrelenting pace. In addition, regulation often requires the combination of disparate data sets so that the pace of data creation, as well as the demands of regulatory reporting deadlines, magnify the need for speed.
• Extracting insights from data: Managing lots of data is one thing, but generating insights from that data is quite another. Too often, existing data repositories are siloed and/or incompatible with other pools of information, making it difficult to extract meaningful output. At a minimum, insights can be constrained and slowed because too much time and effort is spent on managing inputs rather than maximizing output.
• Adopting new practices and technologies: Adopting new RegTech solutions isn’t simply doing more of the same. It requires a fundamental change to nearly all aspects of business processes and procedures, including both development and operations.

In our new white paper, Making Sense of RegTech for Financial Services, we explore the current state of RegTech and delineate many of the top challenges that enterprises face. In addition to these challenges and their solutions, we look at the principles that underpin success, current developments and technologies in the practice, and promising areas of growth.

Learn More

Find out how financial services organizations can get the most from their data with an architecture that’s built for innovation.

Read the blog posts on the guiding principles for RegTech success  and improving data compliance with smarter storage.