Maria Scott, CEO of TAINA technologyprovider of a first-rate regulatory technology platform.
getty
Global regulatory compliance industry thought leaders gathered at numerous global regulatory technology (regtech) summits this year to share industry developments, insights and predictions about where the industry is headed in 2023 .Several trends are expected to play an important role. role in technological advancement and innovation to streamline and simplify the regulatory compliance process.
Here are several emerging and accelerating trends that, based on my experience in the irrigation technology industry, I think you can bet on seeing in 2023.
1. Expect greater adoption of regtech solutions.
Macro trends are likely to increase the market need for regtech solutions as tax authorities become more aggressive in enforcement. Financial institutions are under increasing cost pressure and customers are now becoming more cautious about their experience with financial institutions. This means that the adoption of regtech in the financial industry is expected to continue.
2. Plan phased deployment to support gradual cloud adoption.
As some traditional institutions are not yet ready for the cloud, regtechs must support all forms of deployment (on-premises, private cloud and pure SaaS) as a clear strategic move to the cloud in all types of institutions. As the financial services industry is on this path, regtechs must support the phased rollout of regulatory services, starting on premises and migrating to the cloud when the traditional financial institution customer is ready.
3. Look for wider adoption of plug-and-play regtech rather than highly customized solutions.
In previous years, traditional financial institutions expected significant customizations. But it is now recognized that this long-standing expectation can lead to a significant cost burden for institutions. When it comes to regulatory compliance, it may be safer to stick with technology that is widely accepted by the industry. Otherwise, it could attract greater scrutiny from regulators.
4. Be on the lookout for a growing shift from internal releases to working with suppliers.
Experience shows that building systems usually takes longer and is more expensive than project organizations. Additionally, there could be greater risk associated with in-house builds compared to industry solutions built by regtech-focused companies because they often have more in-depth and current knowledge of regulations.
However, onboarding and recruitment remain challenging and take time. Therefore, if you choose to purchase a solution, make sure your vendor is flexible, able to respond quickly to ongoing and evolving regulatory developments in real time, and can present solutions that fit your needs.
5. Understand that financial institutions want strategic partners and not just vendors.
Financial institutions want to invest in regtech providers who are more than vendors. They are looking for real partners who understand and address their financial and strategic goals. And they select partners with whom there is a clear strategic synergy. Expect this trend to continue in 2023.
6. Prepare for an increasing focus on clean data.
The number of regulatory reporting requirements is growing, with no indication of slowing down anytime soon. As new requirements continue to hit the market, downstream demand for actionable and well-informed data will continue to increase in the future.
Wrong data is expensive. Unstructured data and incorrect reporting mean riskier decision-making, as well as increased manual breaks and reconciliations. This puts financial institutions at risk of regulatory and operational consequences. But regtech has an important role to play in providing accurate, clean and well-measured data sets.
7. Bank of the evolution of the skills of the compliance manager.
Another trend that will likely accelerate in the coming year is the natural evolution of compliance managers from focusing solely on regulations to also having technology skills. Growing global demand means managers need to be efficient and comfortable running and implementing real-time regtech solutions. Your ability to do this is critical to identifying potential use cases, starting slowly and then building on your successes step by step.
Managers need to embrace and adopt an agile approach that is carefully applied over time rather than packing in requirements on day one. Another key skill for compliance managers in 2023 will be working effectively to provide feedback to their suppliers.
8. Follow the audit trail and seek more digital collaboration.
Audits used to require laborious one-on-one meetings and extensive in-person visits with clients to complete. With digital tools and transformation, this is no longer the case. With the remote and digital exchange of information, organizations can now deal with audits remotely, but this requires very strong digital audit trails. If you’re considering investing in a platform, look for one that offers detailed audit trails and enables instant remote communication between distributed team members.
9. Prepare to make customer experience a differentiator that provides greater competitive advantage.
The competition is fierce. As customers become increasingly selective and demanding, financial institutions can gain an edge in their extremely competitive space by adopting the right solutions to improve the customer experience, such as AI-powered help desks or chatbots.
conclusion
Global thought leaders and industry experts in regulatory compliance understand that digital innovations and regulatory technology are key to ensuring competitiveness and robust compliance in today’s new world of digital banking.
Working with financial institutions across the industry, the trends outlined here are materializing in current and planned digital transformation projects. We have only scratched the surface of the enormous potential of regulatory technology to add value and drive the digital transformation of the financial services industry as a whole. I am sure that 2023 promises to be a very exciting year in this space!
Forbes Technology Council is an invitation-only community for CIOs, CTOs and top technology executives. Am I qualified?
