Millennium Consulting

Managing Technological Change, Deployment, Development and Optimisation


Improved Data through the Rise of Regtech

By Brendan Shaw - 18th May 2017

There are huge opportunities for technology to help financial firms meet regulatory requirements. This is driven by the large volume of regulation coming in to play, such as the changes to the Capital Requirements Directive (CRD IV), Capital Requirements Regulation (CRR) and the Markets in Financial Instruments Directive (Mifid II). Most of the new content is driven by the need to adopt international standards into EU law. Everybody in financial services has to spend increased amounts of time and money in addressing regulatory compliance. Almost 60,000 regulatory documents have been published by G20 bodies since 2009 and Europe is currently wrestling with 20 implementation programmes this year alone.

With the wave of new regulation imminently coming into force, legacy processes and tools can no longer cope with the large amount of data that needs to be processed, formatted and tracked to comply with regulatory requirements. Old strategies of using a project-by-project bolt on approach will be increasingly prone to failure and systems that have evolved over a number of years are not necessarily adept on handling real-time datasets.

With this in mind, 2017 is the year of implantation of Regtech. The emergence of new technologies has presented opportunities for firms to reduce the time and effort required to meet existing regulation. Regtech differentiates itself from other forms of technology by its agility. It is able to use advanced technologies to extract, transfer and load data sets which are cluttered to create consumable data. This is done efficiently, which gives businesses the ability to solve problems and stay ahead of the competition. Regtech also offers financial institutions the opportunity to introduce new capabilities designed to leverage existing systems and data to produce up to date information, in a flexible, timely and cost-effective way.

Organisations are also beginning to look at the problem as a data problem. Although regulations differ in what the regulatory body requires, a lot of core data is being reused for numerous reports across the business; therefore, the ability to have consistent data is essential. In implementing regulatory strategies, the biggest challenge is data quality and RegTech doesn’t necessarily solve that. Technological advances can result in cumulative wins, but data remains the most important part of compliance. Regtech allows business to deal with regulations easier, but ultimately if the data quality is not there, no amount of technology will allow you to be 100% compliant.