(4 min read)
The RegTech industry has seen explosive growth in the past few years, and it’s not expected to slow down anytime soon. As the capabilities of technology catch up to the needs of Compliance teams, organizations are beginning to recognize and invest in the substantial opportunities RegTech companies are creating.
And now governments have started to do the same.
The Australian Senate recently launched a committee to investigate how the Australian RegTech space can prosper. Over the course of the next year, the committee will look into, among other things:
- The size and scope of the opportunity for Australian businesses and consumers;
- Current RegTech practices and ways RegTech solutions can strengthen compliance while reducing costs;
- Barriers to the adoption of new technologies within the financial sector.
If executed correctly, this could be a huge boon for RegTech companies and — more importantly — for the financial institutions they serve. But it won’t be an easy task.
Here are a few things to keep in mind as the committee conducts its investigation.
Be Patient, But Not Too Patient
Whenever new technologies are introduced, it can take time to adopt them. The market, the companies that implement new technologies, and the regulators that oversee those companies all need time to understand what those new technologies are capable of and to determine how they should best be applied.
But the more time that passes, the more momentum is lost and the greater the danger to those new ventures developing new technologies. Because for them, the hurdle of time turns into one of costs.
Here’s where the Australian government has a unique opportunity to help financial institutions. If the government can build an environment that helps RegTech companies with gathering the resources they need to get over this hurdle of time and cost, it will allow RegTech companies to collaborate with financial institutions and create innovative, powerful tools that offer real value to Risk and Compliance teams.
To Err is Human — To Forgive, Divine
Similarly, the application of new technologies also comes with opportunities for lessons learned. If initial hiccups sound the death knell for nascent technologies that are still finding their right path, it will ultimately be to the detriment of Risk and Compliance teams who could have benefited from those technologies.
But if instead the government can foster an environment of forgiveness that allows for mistakes — specifically “smart” mistakes, that is, ones made in a controlled environment and within a system that can learn from them — RegTech ventures will be willing to think big about how to meaningfully reduce risk for consumers and improve compliance.
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The Power of Collaboration
“RegTech can be transformative, but collaboration across the ecosystem is key to accelerating adoption.” -Deborah Young, CEO, The RegTech Association
The Select Committee has until October 2020 to collect material and prepare its final report. We hope that they will recognize above all the tremendous opportunity for collaboration that exists right now — between RegTech companies, financial firms, regulators, committees, and others.
There have already been overtures by companies and regulators to work together to solve the task of achieving compliance, efforts supported by organizations like The RegTech Association (RTA). Headquartered in Australia, RTA encourages widespread collaboration between regulators, regulated entities, RegTech companies, and government.
“Technology has a huge role to play in supporting a robust regulatory environment, supporting efficient compliance and bringing trust to any regulated sector,” Deborah Young, CEO of RTA said. “RegTech can be transformative, but collaboration across the ecosystem is key to accelerating adoption.”
Supporting this collaboration will accelerate the adoption of newer technologies and protect the market from previous abuses and mistakes. Additionally, this kind of collaboration will breed transparency, which will then in turn amplify the collaboration.
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The Need for RegTech Solutions is Real
Financial services firms are recognizing that it’s time to change the way compliance is achieved, and that technology can help do this. Through the Select Committee, the Australian government has a real opportunity to connect up Compliance teams with innovative technological solutions that can improve their processes, save them significant costs, and reduce their ever-growing workloads.
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