Regulation is an inevitable part of business decision making, and one through which enterprises must strive to respond to rapid evolutions in both our digital and physical landscape.
It’s difficult to assess a true benchmark of our complex and interconnected global regulatory landscape. A World Bank 2020 report on the issue indicates a positive direction of travel, with 115 economies making improvements deemed to improve the ease of doing business.
While it’s true that many countries are looking at ways to alleviate the regulatory burden, and cut red tape to empower investment opportunities, there is an increasingly frantic global rush to patch perceived regulatory gaps in emerging new dynamics such as financial technology (FinTech), cryptocurrency, mobile money, and new digital communication platforms and paradigms.
Regulation is not an area that traditionally has been seen to move quickly, but regulators are now finding themselves desperately playing catch up with these innovative new platforms and products. That not only means rolling out regulations in an accelerated time frame for regulators, but creating new burdens on businesses. Regulation technology (RegTech) seeks to deliver innovative and digitally-powered solutions to help address these needs.
Where technology and regulation meet
RegTech is a term which is growing in volume in business discussions. Technological solutions to assist businesses in meeting their regulatory requirements is perhaps nothing new of course. The first shift from paper-based processes to digital records could easily be considered an early forerunner of these newer regulatory technologies.
What this new era of RegTech promises, however, are focused solutions that disrupt the existing regulatory landscape, creating targeted and data-driven technologies to maintain and demonstrate regulatory compliance in areas such as anti-money laundering (AML), electronic know-your-customer (eKYC), data protection, transaction monitoring and more.
Analysis of market size projections give a good indication of the growing popularity of RegTech, with projections that market value will grow from USD15.68bil in 2020 to USD87.17bil by 2028. It’s clear that enterprises are investing in solutions to ease this regulatory burden.
What’s more, analysis by the UK’s Financial Conduct Association (FCA) of RegTech adoption in financial services shows that, once in place, net satisfaction of RegTech technologies stood at 95% of all companies due to a number of benefits, with improved compliance seen as the most important.
Risk management is a critical component of this technology-driven landscape, and something that from our own experience at Neural Technologies we know companies are increasingly interested in exploring. Our own portfolio of products in Revenue Assurance, Business Assurance, AML solutions and more all fall to one degree or another in this expanding banner of ‘RegTech’.
It’s true also that the complexity of the landscape is a major driver for these sophisticated data-driven solutions. The traditional ‘borders’ of industries are now changing, something we see clearly in our own long history of delivering effective data-driven solutions for customers within the telecommunications industry.
Telecommunications is no longer an industry focused on enabling seamless communication between point A and point B—even beyond that huge oversimplification of the traditional dynamic. Telecommunications now bridges the divide between communication, finance, connectivity, business continuity, and a whole range of additional critical functions.
The rapidly evolving mobile money market is a valuable example of this. Telecommunications infrastructure is now the foundation for a vital, and expanding, financial system with remarkable benefits for customers around the world.
This fast-growing market not only requires robust fraud protection to ensure customers and operators are secure, but also presents an increasing regulatory concern. Huge volumes of money moving through new digital channels means regulators demand operators ensure appropriate AML systems are in place to reduce the risk of fraudsters and terrorists using these avenues to launder illegal funds. This unlocks a new frontier on the need for robust AML compliance, and demonstrates how changing global trends are driving the need for advanced RegTech solutions.
Compliance is built on data
When it comes to regulation, doing your best isn’t good enough. Businesses need to meet strict regulatory requirements, while also being able to demonstrate to regulators the genuine results of those efforts. That’s why data is such a pivotal part of the modern regulatory compliance landscape.
Our big data world means telecommunications providers, FinTechs, banks, and other industries all now enjoy remarkable potential to unlock new business insight and optimize enterprise operations. This data is also the foundation to understanding and demonstrating regulatory compliance.
Neural Technologies’ Optimus Platform is purpose-built to enable integration of data from all sources and of all types, ensuring that operators can bring all that data opportunity together in a single integrated system, making it much easier to actualize benefits, but also to demonstrate how, where, and why that data has been used.
This ability to integrate data and assets was a key need in the UK’s FCA study, with 41% of respondents noting better/easier integration was key for RegTech improvements, and 38% citing better interoperability with existing tools and processes.
Telecommunications companies have a unique advantage in this regard. The industry is one built on data, with large existing customer bases that can be tapped as the lines between finance, telecommunications, and other industries continue to blur. This data also provides the basis for robust compliance opportunities, as RegTech solutions like those offered by Neural Technologies allow operators to integrate both legacy and emerging datasets into regulatory insight.
In a world where evolving digital technologies are creating new regulatory needs for enterprises, RegTech offers an equally powerful platform to address those needs. As with any such system, ensuring the right data goes in is key to realizing the goals with the insight coming out, but when implemented properly RegTech can be a valuable path to enhanced compliance.