Compliance and risk teams now have a much more favorable view of fintech and regtech innovation, according to a Regulatory Intelligence survey of nearly 800 financial services firms.
The way that the financial services industry operates and interacts with its customers is being transformed by fintech and regtech.
This was highlighted by compliance and risk practitioners from nearly 800 global firms in our second global survey assessing the impact of technology on the role and remit of compliance.
It’s clear from the findings that more firms than ever before are recognizing the benefits of innovation. The survey observed a marked shift in the industry’s opinion of digital disruption.
Fintech and regtech
Fintech is the intersection between finance and technology. It can refer to technical innovation applied in a traditional financial services context or to innovative financial services that disrupt the existing financial services market.
Regtech is the sub-set of fintech that focuses on technologies that may facilitate the delivery of regulatory requirements more efficiently and effectively than existing capabilities.
The original regtech — our Regulatory Intelligence — has been enabling financial services firms worldwide to efficiently manage regulatory change before regtech even had a name!
Role of compliance
The focus on fintech, regtech and cyber resilience has been gathering momentum in the last 12 months.
The challenges for firms range from the need to have the appropriate skill sets at all levels of the business, to the capability to be able to evaluate possible regtech, fintech or insurtech solutions.
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All of which is set against a background of a near universal need to revamp legacy systems, while also implementing and embedding massive regulatory rulebook changes.
Against this backdrop, Regulatory Intelligence undertook its second global survey to assess the impact of developments in regtech and fintech on the role and remit of the compliance function in financial services firms.
Here are some of the key findings from this year’s report:
- Eight-three percent of respondents reported having a positive view of fintech, innovation and digital disruption. This is almost double the 2016 results, where only 42 percent reported a positive view.
- In parallel, 75 percent of respondents reported having a favorable opinion of regtech innovation and digital disruption. Only 40 percent held a positive view in 2016.
- The biggest financial technology challenge for firms in the coming year is the need to upgrade legacy systems along with cyber resilience and technology risks. On the benefit side, the deployment of fintech is expected to lead to improvements in efficiency and productivity providing greater commercial opportunities.
- Compliance and risk teams are substantially more engaged in assessing the implications of fintech innovation. Eighty-one percent of respondents reported involvement, with 37 percent being fully engaged and consulted. This increased engagement is expected to lead to improvements in efficiency and productivity within risk and compliance functions.
- Skill sets continue to grow rapidly in risk and compliance functions to keep pace with developments in fintech, with 75 percent of respondents reporting a broadening of skill sets and 28 percent investing in specialist skills
- Regtech solutions are increasingly affecting how firms manage compliance, and have risen by almost a quarter to 76 percent. The number of respondents who reported having already implemented a regtech solution almost doubled, to 30 percent. The majority of firms believe that the successful deployment of fintech/regtech should drive up efficiency and effectiveness, allowing more time to focus on value-added activities.
- The budget available for regtech continues to vary widely. Over one-third of respondents expect their budget for regtech solutions to grow in the next 12 months. At the other end of the scale, the number of firms that reported having no budget for regtech has dropped significantly to 9 percent.