The regtech space is in for a major shake-up, with the FCA‘s new Consumer Duty regulations coming into effect in two months. This presents an opportunity for financial institutions to adopt a new approach to compliance and regulation.
The pandemic acted as a transformative force in the regtech realm, igniting an unparalleled surge of advancements. Yet, it would be amiss to claim that the industry lay dormant prior to the arrival of Covid-19.
In order to grasp the full scope of the regtech landscape and fathom the magnitude of this evolution, we ventured into the industry itself, delving deep into the metamorphosis of compliance over the course of the past decade.
In the latest in our May’s monthly regtech focus, we hear from LRN, Fintel Connect, Shieldpay & Symphony.
‘Necessity, protector, prominence’
Fintel Connect is on a mission to support the banking and financial ecosystem with tools and insights that will allow them to better reach future customers. Its CRO Alana Levine suggests compliance has shifted from necessity to essential protector and guide, ensuring success and safeguarding financial institutions and customers.
“I think compliance has always been seen as a necessity within organisations, but now teams are seeing their compliance counterparts as an important function of gatekeeper and protector. The reason for having regulations and controls in place is to ensure the financial institutions and their customers are protected.
“With new developments in the industry, new fintechs and innovative technology solutions launching every other day, compliance is now playing a more prominent role. With greater access to data and increased attention to what is happening in the industry and around the world, compliance is now taking a seat at the table and guiding decision-making from the beginning. Rather than just being a checkbox that needs to be ticked off, compliance ensures that brands are set up for success and people are really seeing the value and importance of it.”
‘Evolving compliance landscape’
Compliance professionals now need to navigate diverse stakeholder dynamics and fintech challenges to foster growth, says Scott Newby, head of compliance & MLRO at Shieldpay, which orchestrates secure digital B2B payments, specialising in transactions that need more than just straight-through processing.
“As the role of compliance evolves, officers are wearing multiple hats. In one instance, we’re talking to the board and in the next we’re talking to the payments team – and the messaging for each of these stakeholder audiences is very different.
“It’s a real skill to be able to balance multiple stakeholders as well as tackle the challenges within the fintech space to promote growth.”
‘Digital revolution shapes regulations’
For Brad Levy, CEO of Symphony, the past decade has seen a technological revolution that has “brought us completely into the digital era”.
“The way we connect and do business has changed so much, and regulations have to keep up with that,” said Levy.
“Markets have long held compliance standards for businesses to adhere to, but recently, more so than ever, regulatory bodies are increasing their requirements for compliance.
“There is a much greater need to maintain records for compliance, particularly when looking at any sort of communication in financial markets.
“It can be very easy for a client to be reached by SMS or instant message, but if there is no compliant record of those conversations the work of regulators is all the more difficult.”
‘Leveraging values and ethics’
Susan Divers, director of thought leadership and best practices at ethics and compliance solutions provider, LRN, said: “Compliance has clearly evolved from a check-the-box activity in the last 10 years into a practice that leverages values and ethics to build a better workplace culture. While rules are good for fostering appropriate behaviour, it turns out values are better.
“If people are equipped with the why behind the behaviours that are expected, and not just the what, they’ll make better choices even when the rules are unclear. Shared company values go a long way in guiding how to respond in moments of ambiguity and uncertainty.
“That is something we have surely seen a lot of lately, between the pandemic, current economic headwinds, and geopolitical conflict.”