Banks Turn To Technology To Cope With New Regulations

Financial firms in Europe have spent billions on regulatory compliance, and they still face more new rules that will require more spending, according to JWG, a London think tank focused on regulation.

“Why, after eight years of regulatory reform, is the industry still struggling to fund companies that can revolutionize the way we establish policies and ensure compliance?” asked CEO PJ Di Giammarino. Its JWG Regtech Capital Markets conference in London on March 7 will bring together financial firms, regulators, technology companies and consultants to discuss existing and pending regulation.

MiFID II took effect in January but beyond that are Europe’s GDPR, BCBS 239, Recovery and Resolution planning and other horizontal regulations that impose named accountability for senior managers, Di Giammarino said.

The good news is that regulators across countries seem to be collaborating, wrote Tom Bicknell, research analyst at JWG Group

“2017 saw significant developments in financial and regulatory technological innovation – and many regulators have been moving in parallel…the global collaborative fabric is coming together” to protect the system and consumer while, at the same time, promoting growth and innovation.

JWG’s research has found regulators collaborating on modernizing rulebooks, digitally filtering and routing regulations, providing advice on regulatory obligations, undertaking regulatory reporting and domain modeling, conferring on KYC and on algorithmic trading.

UK's FCA actively works with fintech and financial firms

Leading the way has been the UK’s Financial Conduct Authority (FCA) which sponsored a Techsprint in November “to use RegTech to prove the regulatory reporting burden for firms could be reduced by automating the interpretation process.” The FCA has also developed a sandbox to let financial and fintech firms “test theories and concepts within a safe space before they fully enter the financial services market.”