Can Regulatory Monitoring solve the Regulatory Change Management Challenge?Published on 8th June 2022
WHY IS THERE A CHALLENGE?
We have experienced an increasingly accelerated and active regulatory environment over the last few years which has had a serious impact on the financial services sector with the number of regulatory notices published globally increasing by 158% since 2019.
It is not just the increased volume of published regulatory content but the complexity, the risk and the change management of this content that has led to many firms struggling to keep up. Regulations can be conflicting and have varying rules on how to comply and implement depending on the specific jurisdiction or entity.
The challenge with regulatory change management is that there are not just many hundreds of sources of regulatory data that need to be collected, collated, identified as relevant, risk rated, triaged, and actioned by relevant teams but that there are also updates to current or proposed regulations. Add to that new regulations coming out from another regulator, maybe in a different jurisdiction, that may change the way a current regulation needs to be interpreted and actioned. There may also be several departments and locations involved in analysing, policy development and actioning as regulations are often impactful across functions within a firm.
Currently many firms are still trying to address this challenge by increasing the number of people involved in the process, adding headcount to ease the problem. But this popular approach carries an additional risk with manual handing error likely when using desk top solutions, such as spreadsheets, to hold information, and missing out on the changes coming though. It is also problematic across teams and jurisdictions and in proving operational resilience to the regulators, as it is unable to show an audit trail of actions taken by team members including the triage of a piece of published regulatory content and the allocation and completion of that work.
Financial services firms must adapt to regulatory change at the same time as making any changes or updates required across multiple jurisdictions – while remaining regulatory compliant with external regulators and internally compliant with their own compliance policies and tolerances.
IS THERE AN ALTERNATIVE WAY TO HANDLE THIS CHALLENGE?
The financial services sector is seeking an alternative for a number of reasons including ongoing digital transformation projects, cost considerations, regulatory risk reduction and the quest for greater competitive advantage.
They are turning to Regtech firms and how they approach the challenge, with their use of technology and AI (artificial intelligence) to automate and digitise published regulatory content. Using regulatory monitoring, including horizon scanning, the content is automatically updated through the day, categorised using a specialist taxonomy and risk rated. There is functionality to facilitate the triage of the content and task allocation with a full audit trail. Using a SaaS, web-based solution allows users to login from any jurisdiction to the same information. APIs give firms the ability to easily integrate this type of solution into other parts of their technology including their GRC (governance, risk, and compliance) solution.
This is the alternative solution and it continues to grow in popularity across the entire financial services sector including banking, insurance, investment management, payments and those engaged in crypto services.