By Donal Lawlor
#REGTECH2019 was held in Dublin last week. It was attended by chief compliance, risk and audit officers from the asset management, insurance, bank and credit union sectors. Some of the key themes and topics discussed on the day were as follows;
- Compliance Culture Diagnostics
- The growing importance of clean data and MI in governance
- Practicalities of implementing a RegTech solution
- Accountability for Senior Executives – The regulatory horizon
- CBI regulation of RegTech providers
Compliance Culture Diagnostics
Conventional approaches to assessing culture rely heavily on individual metrics such as regulatory findings and training, focusing on the consequence rather than the cause of poor compliance. As a result, senior management may not have their finger on the compliance cultural pulse and the desired tone is distorted on its voyage through an organisation. Cultural diagnostics works by combining a values-based approach with a compliance-focused approach. It has been proven as superior in identifying compliance strengths and weaknesses in an organisation.
Growing Importance of Clean Data and MI
Personal liability and increased regulation are becoming challenging for senior management. This can only be solved by the provision of clean MI with a reliable summary of risks. Solutions that take data directly from ‘Golden Source’ to the board are especially valuable. In contrary to this position, an over-reliance on spreadsheets and manual compliance activity is a risk. An evidence repository and tracking as part of a solution is important – ‘if it isn’t evidenced it isn’t real’.
Practicalities of implementing a RegTech solution
The importance of simplifying techstacks: a new solution must be aligned with business strategy and be agile in growth and change. Often financial organisations have multiple platforms that are rigid. Thinking big but starting small via a modular approach is recommended. It is estimated that building a RegTech solution in-house takes 18 months. For a RegTech implementation to be successful it is important to have multiple internal champions for the new solution.
Regulatory trends – Senior accountability regime
Following SMCR in the UK (Senior Management Conduct Regulation) the Central Bank of Ireland has strongly recommended that reforms assigning responsibility to senior personnel be adopted in Ireland. Minister of finance plans to introduce similar laws for Senior Executive Accountability Regime (SEAR) in 2019.
Regulation of RegTech
21 (14.5%) of the 143 FinTech firms operating in Ireland are in the RegTech space. RegTech will make regulated firms more ‘supervisable’ for the regulator – leading to lower risk ratings. The central bank sees RegTech as a positive tool as senior executives cannot have manual oversight of all risks inherent in business. Taking this a step further it is feasible that regulators regulate and certify RegTech providers.
REGTECH 2019 was held on March 12th. Speakers included Deepa Keswani (Mizen Group), Peter Oakes (Fintech Ireland), Edward Doyle (Kyckr), Ogie Sheehy (ViClarity), Ken Owens (PwC), Patrick Kelly (Mizen Group), Tom Butler (University College Cork).
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