Using RegTech to transform compliance and risk from support functions into business differentiators

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Using RegTech to transform compliance and risk from support functions into business differentiators

Technological innovations continuously emerge, offering new risk and compliance solutions to help financial firms to comply and manage their risks at lower cost.

The sheer volume and complexity of new and existing regulations have had the unintended consequence of encouraging financial service providers to focus on compliance rather than innovation. Regulations such as Packaged Retail and Insurance-based Investment Products (PRIIPs), the Payment Service Directive 2 (PSD2), the fifth Undertakings for Collective Investments in Transferable Securities Directive (UCITS V), the Markets in Financial Instruments Directive (MiFID), the fourth Anti Money Laundering Directive (AMLD IV), the Capital Requirements Directive and Capital Requirements Regulation (CRD and CRR), the European Market Infrastructure Regulation (EMIR), and the second Market Abuse Directive (MAD II) are just a few examples of the systemic shift in terms of compliance and risk, capital and liquidity requirements, and governance and supervision with which all investment management actors must comply.

Executive Summary

In parallel, firms have been cautious to innovate due to the regulatory uncertainties underlying the development of new products and the deployment of pioneering technology. However, in the context of the ongoing digitalization of our day-to-day life and the consequential redefinition of the way we live and work being driven by technology, the last years have witnessed the emergence of promising and innovative companies targeting the regulatory environment to support efficient compliance management from an IT perspective—the so-called RegTech companies (RegTechs). Put simply, RegTechs offer solutions that use technology to solve compliance and regulatory issues.

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Inside Magazine Risk Global edition, February 2018

Inside is Deloitte’s quarterly magazine offering an exclusive insight into best practices, trends and opportunities faced by our clients across all industries.

Inside focuses on the main hot topics relevant for the market (Asset management, Banking, Insurance, Public sector, Healthcare, Private equity, Real estate, TMT, Manufacturing and consumer business, Transport and logistics).

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