What would we like to see?
The FCA are clear in their analysis: RegTech has the potential to help firms comply with regulations more efficiently and effectively. In other words helping to saave time and money and to reduce (non) compliance risk.
It is helpful that the research aim was to understand what firms want from RegTech rather than telling them what they need. After all, the FCA can really only see what is front of them: regulatory reporting, specific themes they investigate from a supervisory perspective and so on - but that is not representative activities, such as compliance monitoring, that compliance functions carry out on a daily basis.
We believe that:
Regulated firms listen to what the FCA say and advocate. By not having detailed insight of the benefits of RegTech, the FCA impacts what firms do as much as when they do have detailed insight.
The Statutory Code of Practice for Regulators means that the FCA has an obligation to help firms manage their compliance more efficiently (i.e. with less cost) - and wnderstanding the benefits of RegTech provides a perfect opportunity for it to do that.
- The FCA could help more by taking take the time to understand where the real costs of compliance come from. This could, primarily, answer to the question "what tasks take compliance functions most time?" it would then be able to analyse the extent to which RegTech can deliver real cost benefits for firms.
Research needs to be more precise and offer use cases for specific types of situation and company. To drive real insight into the benefits of RegTech, research needs to be prepared to look at specific use cases: e.g. compliance management, regulatory change, AML, and so on.
So, our message to the FCA would be “this is great research – but if you made it specific to the most important use cases and did more to understand the ‘pain’ that firms experience in how they manage specific aspects of compliance, then you would better be able to identify more precise benefits for firms.”
For example, when we run our ROI model with specific clients it shows a high return. If the FCA knew the ROIs achievable for different RegTech applications and use cases with different types and sizes of firm then it would be in a much stronger position to those firms maximise RegTech benefits.