Collaboration has always been a critical tool for sustainability and success in Financial Services, given the continually evolving business landscape and increasing rate of disruption from agile players. Now more than ever, strategic alliances – such as those with RegTech companies or Managed Services partners – are a necessary part of business strategy, especially when it comes to compliance management.
The TAS Compliance Index analysed the views of C-level executives and senior managers in banking, finance, insurance, superannuation and IT/technology. These insights explore the challenges and opportunities in compliance obligations, and the key strategies leaders can adopt to manage more effectively.
Despite growing awareness of compliance requirements in Australia, especially after the 2019 Banking Royal Commission, many companies are yet to truly meet their obligations. According to leaders surveyed, this has been mostly due to a lack of resources, time and skills. However, a significant opportunity is being missed to mitigate these concerns – the majority of which are resolved by forming strategic business alliances.
In previous Indexes, we explored Australia’s RegTech landscape and found promising signs of exponential growth in Australia. However, the uptake of partnerships has been slow, with leaders hesitant about leveraging these solutions. The Index found nervousness around partnering with smaller players, like RegTech start-ups, due to risks associated with early-phase companies. Currently, only 23 per cent of leaders are engaging with RegTechs, and only a mere 3 per cent are actively pursuing partnerships.
However, as the rest of the world demonstrates, the opportunity is significant. Major retailers like Nordstrom and Priceline leverage Forter’s Decision-as-a-Service technology to automate fraud monitoring. And, digital payment companies like Nets use third-party, Chainanalysis, businesses to validate the increasingly widespread use of digital currency and comply with federal standards. These engagements allow companies to de-risk and minimise resources.
In today’s highly volatile age of disruption, let’s not ignore the value of RegTech and other third-party services. Here are three critical ways that partnerships can support leaders’ compliance management efforts:
Automated processes. RegTech solutions allow companies to measure compliance against upcoming regulation in real-time, allowing them to build platforms leveraging AI and machine learning to automate the process end-to-end.
Proactive risk management. With automation through RegTech comes the ability to rapidly identify areas of risk and non-compliance before they become an issue, which is critical when coupled with an exponential increase in data volumes.
Effective resource management. RegTech is a cost-cutter. By leveraging the tools to draw more from data and automating actions on insights, financial services firms will have to invest less on operational excellence efforts outside of this.
Considering the current climate and the growing challenge of meeting compliance expectations, firms should put nervousness aside and look at RegTech, and other partners, as critical for the future. Being proactive with regulatory technology and deploying innovative solutions will allow leaders to stay both compliant and competitive.
The success of the industry lies in collaboration. Learn more in the fourth edition of the TAS Compliance Index here.