Risk management and compliance have been a major focus of financial institutions all over the world. The impacts of the Covid-19 pandemic have raised the hurdles for financial firms even higher than before. The adoption of regulatory technology (RegTech) in compliance programs has always helped banks and financial firms enhance their risk management capability. Various factors such as the changes in business models, regulatory practices, and the dynamic nature of the outside world continue to compel financial firms to resort to technology for meeting their compliance needs.
RegTech tools help financial firms automate compliance processes with the help of technology. As a result of this, costs incurred in compliance programs can be reduced, and the coverage, consistency, and effectiveness of the program can be increased. Financial regulators have also started the practice of adopting SupTech or supervisory technology into their work processes for effective monitoring of financial firms.
The Covid-19 pandemic has brought a lot of changes in people, both professionally and personally. The traditional monitoring tools and policies that firms used to implement on their employees seem to have become ineffective due to the current work from home culture. This poses a serious concern of employees being non-compliant. Also, the crisis may open new opportunities for financial crimes and could impact the most vulnerable consumers. People can also become tempted to gain profit from illegal activities due to challenging economic conditions.
But the implementation of RegTech solutions in business can help financial firms legally monitor their employees and ensure compliance. Regulators around the globe are now encouraging financial institutions to adopt RegTech solutions to increase the monitoring capabilities of firms.
RegTech grant scheme by the MAS
In a recent statement by the Monetary Authority of Singapore (MAS), the Singapore financial regulator confirmed that they will be putting aside a 42 million Singapore dollars fund for a new RegTech grant scheme, and the enhancement of the Digital Acceleration Grant (DAG) scheme. The DAG scheme was initiated by the MAS in April 2020 to support smaller financial institutions and FinTech firms for the adoption of digital solutions to enhance operational resilience, increase productivity, better risk management, and improved customer service.
The grant scheme will be available to financial firms based out of Singapore. According to the MAS, the grant scheme will encourage a vibrant RegTech ecosystem in Singapore.
The MAS will provide assistance to the firms through this grant scheme in two tracks; pilot track and production-level project track.
- Pilot track: Under this track of the grant scheme, financial firms can request for funding RegTech projects in their pilot phase, before their complete integration into the operating environment. The maximum funding done by MAS in this track is limited to 75,000 Singapore dollars.
- Production level project track: Using this track, financial institutions can request funds for the complete development of large-scale customized projects that can be completely deployed into the systems of the financial institutions. The maximum funds allowed by the MAS in this track will be 300,000 Singapore dollars.
Using both these tracks, financial firms can either develop their unique RegTech solutions or can partner with RegTech firms based in Singapore.
HKMA’s roadmap for RegTech adoption
Seeing the recent trends in the adoption of technology by financial firms, the Hong Kong Monetary Authority (HKMA) commissioned an external consultant to determine the current state of RegTech in Hong Kong. The consultant was also responsible to evaluate the common practices and roadblocks in RegTech adoption, and prepare a roadmap for the deployment of RegTech in the banking sector.
The HKMA’s white paper entitled “Transforming Risk Management and Compliance: Harnessing the Power of RegTech” proposes 16 recommendations, which lays the foundation of HKMA’s RegTech roadmap.
For the implementation of recommendations in the white paper, the HKMA will conduct a series of events and initiatives that includes the following:
- Increasing the banking sector’s awareness of the potential of RegTech by hosting a large-scale event
- Launching a Regtech Adoption Index;
- Stimulating innovation by organizing a Global RegTech Challenge
- Publication of a “Regtech Adoption Practice Guides” series
- Encouragement of information sharing with the creation of a centralized “RegTech Knowledge Hub”
- Development of talents with the establishment of a RegTech skills framework
The Deputy Chief Executive of the HKMA, Mr. Arthur Yuen said that after the announcement of the HKMA’s seven Smart Banking initiatives in 2017, there has been a phenomenal development in FinTech. Mr. Yuen confirms that HKMA is putting the same emphasis on RegTech, due to its capability in risk management and compliance.
According to HKMA, the two-year roadmap will aid in building a thriving ecosystem that will change Hong Kong into a RegTech hub. Ideally utilizing this opportunity to capitalize on the benefits of RegTech can bring a huge advantage to the banking industry.
FCA’s views on the adoption of RegTech
Investments in the RegTech industry increased by more than two folds during the years 2017 and 2018. Estimates predict that the global market for RegTech will be at a worth of 55 billion US dollars by 2025, where the highest number of RegTech firms will be operating in the UK. Yet the RegTech industry faces certain challenges that existed even before the Covid-19 crisis. Challenges include long sales cycles, complexities in the deployment of the RegTech solution into the IT systems of regulated firms, and trust issues between vendors and buyers.
Despite the existing challenges faced by the RegTech industry, the Covid-19 pandemic has further added up to their burden in the form of lack of investments. The downturn of the economy has affected the funding, recruitment, cash flow, and projects of RegTech firms. Also, a decrease in venture funding raises a problem for future investments.
It has been seen that some organizations are giving less priority to innovations and are focusing on Covid-19 related projects and funding less critical projects. Compared to the FinTech industry, RegTech is new to the market and it is less established. RegTech firms must work collectively so that they can build trust with policy-makers and regulators, and engage more with the industry.
The Financial Conduct Authority (FCA) views that policy-makers and regulators can assist RegTech firms by hosting formal forums between policy-makers and RegTech firms, ones that currently exist in the FinTech community so that better engagement is possible. Regulators must continue their support towards the adoption of technology for meeting regulatory challenges, while carefully monitoring this sector. Regulators can also use international networks and events to find out more modern trends in the RegTech and SupTech industries.
TeleMessage falls under the RegTech category in the FinTech industry. TeleMessage offers a wide variety of solutions that allows financial firms to be compliant ready always. The tools offered by TeleMessage help financial institutions capture mobile calls and also capture mobile text messages. The instant messaging archiving solutions offered by TeleMessage perform activities like the recording and archiving of mobile instant messaging applications like WhatsApp, WeChat, Signal, and Telegram, for ensuring regulatory compliance.
Implementation of the RegTech solutions offered by TeleMessage can help regulated financial firms meet their regulatory compliance requirements, and can avoid any chances of being non-compliant.
TeleMessage captures and retains mobile content, including mobile SMS messages, voice calls, and WeChat and WhatsApp conversations from corporate or BYOD mobile phones to ensure compliance with various data protection regulations. The messages are securely and reliably retained within TeleMessage servers or forwarded to your choice of data storage vendor.
Our mobile archiving products securely record content from mobile carriers and mobile devices for various ownership models (BYOD, CYOD, and employer-issued). With our multiple archiving solutions, you can always find the right tools or blend for your requirements:
- Network Archiver
- Enterprise Number Archiver
- Android Archiver
- WhatsApp Archiver
- WeChat Archiver
- Signal Archiver
- Telegram Archiver
TeleMessage offers cross-carrier and international mobile text & calls archiving for corporate and BYOD phones. Visit our website at www.telemessage.com to learn more about our mobile archiving products.