In an era where businesses are increasingly being impacted by customer requirements, financial services firms often find themselves in a difficult position. Not only are they tasked with the safe management of highly sensitive and personal data, they also face the imperative to allow the interface of potentially high-risk digital channels with their core operations and to do this without violating rules around regulatory compliance.
Until now, the predominant way in which financial services companies dealt with walking this fine line was by investing heavily in people and processes that could keep tabs on a wide array of regulatory requirements. The advent of RegTech over the last few years has turned this approach on its head by providing companies in the finance space with smart, reliable, and nimble tools, which swiftly and accurately comply with regulations.
In 2019, we should expect a new wave of RegTech solutions emerging – from bots to AI to beacons – and these technologies will make their way across business domains including the financial services industry to further drive, refine, and empower compliance.
Turning to bots to get the job done
In order to better grasp what will be unleashed next in RegTech, let’s take a closer look at what bots will do in this landscape. For a start, bots will no longer be confined to only answering questions or correctly stacking volumes of data in the appropriate categories but actually moving out into the heart of compliance territory to get things done.
It would be a given that bots would be GDPR compliant and come equipped with the intelligence to provide on-point advice on how a company can safely traverse two sets of regulatory requirements in cross-border negotiations, without adversely affecting the prospect of revenue from new business or putting its own reputation as a compliant entity at risk.
Further, these bots would also enable compliance officers to reach decisions quickly in matters that would have otherwise taken weeks, if not months, to finalize. This means businesses can go ahead and sign new deals knowing that due diligence has been done on all matters relating to regulatory compliance.
AI and the gifts of accuracy and speed
The second next-gen technology that I see taking the lead in helping financial institutions meet the ever-increasing burden of regulatory compliance is AI. It is likely that the next few years will see AI creating a semantic web that would make it possible for machines to read, scan, and scour webpages, simplifying regulators’ jobs to keep banks and other financial institutions in the green from a compliance perspective.
AI will also be used by financial institutions to expedite compliance with a range of regulatory requirements including Know Your Customer (KYC) and Anti-Money Laundering (AML) protocols by identifying ‘red flags’ and highlighting transactions that either need to be swiftly quarantined or undergo further diligence. In fact, as the exponential interactivity engendered by the digital age continues to grow, it is likely that banks and other large financial institutions will be increasingly turning towards AI for more effective approaches to prevent fraud, manage risks and carry out regulatory obligations.
Additionally, AI will be used by both financial regulatory authorities and firms to convert complex and voluminous regulatory handbook requirements into ‘machine-readable’ language. This would not only free up regulators and financial firms from the resource intensive procedures that regulatory reporting currently entails but also pave the way for more accurate, industry-wide reporting and quicker risk identification.
Beeping in bonafide access with beacons
Next up on my list of exciting RegTech tools that have the potential to meaningfully impact regulatory compliance are beacons. Beacons have more traditionally been associated with the retail space, physically situated in and around brick-and-mortar settings. However, these small Bluetooth-enabled radio transmitters are also of relevance to other industries including the healthcare industry as they can help healthcare companies meet their regulatory compliance requirements by simplifying processes around hospital admission, asset management and data safety.
Let’s begin by considering hospital admissions. At a time when there are growing concerns around both physical and digital safety at medical centers, beacons offer an ability to streamline the admission process while providing an extra layer of security. The ability to install them at multiple locations near the entrance to wings, departments and hallways across a medical center means they can help verify the identity of visitors, staff and patients as they enter or exit an area within a hospital or the premises. This not only creates efficiency, reduces admission frustration, but also enhances the safety of patients, visitors and hospital staff.
As healthcare institutions deal with an ever-increasing influx of advanced equipment, there is also a growing need to have an asset-tracking system to ensure staff is able to find the equipment they need, when they need it. Beacons offer to do just that by letting staff locate where a certain diagnostic tool is and ensuring the safety of patient data by not letting anyone without the required ID gain access to private health information stored on medical equipment. And, as equipment and connected devices continue to grow in usage in the health space, so does the information they collect and the need for data safety. Because beacons can be physically located at multiple locations across a premise, beacons promise to either allow or curtail access to patient data on-the-go, thus providing a much-needed safety layer to health information that can be hacked, misused or lost.
It’s clear that as data across industries continues to grow exponentially so do the volumes of rules to ensure regulatory compliance. Financial services organizations and healthcare companies alike will do well to ride the wave of RegTech to arm themselves with the tools they need to efficiently and effectively keep on top of ever-more complex regulatory requirements.
