Calls for ‘paradigm shift’ in use of Regtech

Britain’s financial firms and regulators should step up the use of technology to cut the cost of compliance and make the City of London more globally competitive, according to a new report.

The report from the corporation that runs London’s ‘Square Mile financial district called for the removal of barriers to engineering a ‘paradigm shift’ in the use of RegTech.

RegTech refers to the emerging use of technology to streamline and cut compliance costs at financial firms, such as for reporting data on market transactions to regulators and spotting crime.

The reports says that the annual cost of compliance for Britain’s top five banks could be cut by at least 0.05% or a combined £523 million pounds by greater use of RegTech.

Its use is being held back by long procurement cycles, slow decision making inside firms, lack of awareness about RegTech, constraints from existing technology, and lack of funds, the report said.

Catherine McGuinness, head of the City of London Corporation, said “We are calling for more to be done to support the sector to grow and thrive, strengthening London’s global competitive offer and benefiting the wider UK economy,”

Responding to  research Paul Randall, CEO, Creditinfo said “RegTech should become a regular topic of conversation between regulated firms and supervisors.”

“Financial institutions – in London and all over the world – need to fundamentally shift their attitude towards technology in order to keep pace with change and remain competitive.”

“By enabling economies to further grow and develop by decreasing risks for a diverse range of market participants, including lenders, consumers, and businesses, Regtech benefits the whole financial system.”

“There is such a wide variety of Regtech offerings today which can help banks slash the cost of compliance and better deliver for their customers. Their data scientists now have access to technology that can incorporate including psychometric and biometric profiles, SME financials and smartphone data to create intelligent risk assessments that enable credit and lending decisions to be made in fractions of seconds. This not only offers financial institutions enhanced security at a low cost, but can also help bring billions of ‘unbanked’ adults across the planet into the financial system.”

“We’ve worked on mobile scoring projects with major banks which shows there is a growing appetite in this country for increased investment in tech. However, traditional established banks need to work alongside fintechs and regtechs to ensure that their services are accessible to all in society, whether that be through initiatives to upskill more vulnerable citizens in digital banking, or alternative means of accessing credit and services.”