Compliance framework vs. RegTech with Big Data

Around 6 months ago, I was being invited to participate in a panel discussion for an IT security conference.  The topic was about Security Innovations and my focus is mainly on AML transactions monitoring as that time I was still working in this area for a global banking incorporation.  Recent years, people start to discuss about the Regulatory Technology: - RegTech.  The origin of the term “RegTech” was introduced by the Financial Conduct Authority (FCA), defining this as: "RegTech is a sub-set of FinTech that focuses on technologies that may facilitate the delivery of regulatory requirements more efficiently and effectively than existing capabilities".  And I believed that RegTech is not only the ordinary technologies that highly used in the compliance transactions monitoring or name screening, but also an innovative high-tech solution on making the compliance more effective and efficient, in other words, a real revolution of the entire compliance framework today.

Compliance today is basically regulatory enquiry oriented resulting that the regulators continue to increase their scrutiny and then fines.  I think the major reason is that regulators just indeed do not know what and where the industry would do and moving forward.  The business model is ever-changing, from the ATM/Phone Banking in early stages to the e-Banking in mid 90s to the recent FinTech era.  Over the last several years, regulatees have had to deal with an increasing number of diverse, uncoordinated and ever-changing set of regulations across different locations.  To stem the tide, moving towards to a more holistic regulatory response mechanism might be the only door to out and the innovations of RegTech with Big Data would be the key.

Put into practice, I believed that RegTech is more on a workflow and I think one of the ways that we could go is to combine different market available solutions into the compliance workings cycle.  For example, we could leverage the artificial intelligence solutions with the Big Data detection scenarios and the audit sampling approaches, such as combining Assisted Review in e-Discovery with Cumulative Monetary Amount (CMA) sampling method on top of the existing detection scenarios approach.  I would be very keen that RegTech would create a revolution for today’s compliance which would facilitate the delivery of regulatory requirements and continue improves the efficiency and effectiveness of the existing capabilities.  There is always a better solution to make our world better as well as making our life easier and RegTech approach would definitely be one of these where I would share more on my experience in the near future post.  However, the very first road-block now might be more on the today’s compliance management people on who firstly dare to make this little step forward as to overcome the today’s problematic compliance approaches. 

If you are also interested in this area, please feel free to drop me a note and I am always happy to discuss and work together with you as to make this little step forward.