Thomson Reuters Regulatory Intelligence's newly released "Regtech: The governance lifecycle" report offers insight into what good governance looks like
It is estimated that the pandemic has accelerated digital transformation by as much as three years. Regulatory technology (regtech) has been a part of that acceleration and is seen as a growing marketplace all its own, with a range of potentially valuable solutions to offer.
To delve into this further, Thomson Reuters Regulatory Intelligence has released a new report, Regtech: The governance lifecycle, which builds on the Thomson Reuters’ Fintech, Regtech and the Role of Compliance Report for 2021, which itself warned financial services firms to be careful to deploy digital solutions on solid foundations and get corporate governance right.
You can download a copy of Thomson Reuters report, Regtech: The governance lifecycle, here, and view our latest video on the report here.
The new regtech lifecycle report explores what good governance looks like when applied to the implementation and embedding of regtech applications. That said, the report does not consider the efficacy of individual regtech solutions; instead, it considers how firms could assess which solutions best meet their specific requirements and can thereby maximize the potential benefits of an investment in digital transformation.
Regtech has much to offer financial services firms and their compliance functions; however, potentially numerous challenges need to be overcome first in order to reap all the possible benefits. In particular, firms would be well advised to review their regtech strategy and its application regularly, to provide assurance that they are getting the greatest value and that the direction of travel corresponds with their strategic direction. As part of this review, firms should consider how the solution would be decommissioned and the risks this poses.
You can also listen to the Thomson Reuters Compliance Clarified podcast series, which discusses the regtech lifecycle report and can be found on Apple, Spotify, and Google.
Regtech is likely to be an inherent part of any digital transformation in a financial services firm; and as such, it is critical that firms play close attention to the corporate governance attached to the lifecycle of any regtech solution under consideration. Otherwise, firms could find not only that they fail to reap the potential benefits but also that there is a build-up of regulatory issues which impact both the firm and senior individuals. Equally important is to build regtech solutions on trusted, secure foundations.
Gone are the days when the IT function, capable or not, was trusted with driving technological change. It is now a prerequisite for many board members and senior managers to have sufficient knowledge (or ready access to that knowledge) in order to challenge and oversee a firm’s technological strategic direction.
The key to that strategic direction is building the capacity and capability to trust the output of any regtech solution, so the solution itself can become part of the firm’s management information and better inform decision-making.