Digital transformations and technological innovations lead to change in the financial services industry, demanding that it adopt new working practices powered by fintech, regtech, and insurtech.
FREMONT, CA:Digital transformation and technological innovation continue introducing widespread change to financial services companies. Such firms have decided to move with the new working ways adopted during the pandemic, supported by emerging iterations of fintech, regtech, and insurtech.
A recent report on fintech, regtech, and the role of compliance highlighted that the most significant challenges concerned data, operational resilience, the management of third parties, and skill sets.
Data is the strategic asset of the digital age, and firms must embed data governance frameworks as a key competency within their corporate governance settings. Operational resilience includes digital solutions, which often operate critical business functions and should be resilient to any disruption. Furthermore, risk and compliance applications should be able to accommodate any shift to alternative working patterns.
Third parties are important to fintech application development. Outsourcing or third-party arrangements should be part of companies’ risk management infrastructure. The final aspect is skill sets, involving firms' need to invest in more specialist technological skills, although determining what those skills should be is a challenge in and of itself.
Organisations should focus on their approach to data, embrace the idea that data is a vital strategic asset, and establish a business-wide approach to data management, aggregation, storage, security, retrieval, and destruction. More specifically, firms should build a business-specific approach to data governance. The successful governance of data will have a myriad of benefits, including greater visibility into risks in a hybrid working environment and enhanced recordkeeping.
Furthermore, businesses should invest wisely in skills and infrastructure to deliver data governance. They must reassess their priorities in a post-pandemic world and ensure an appropriate level of continuing investment in their risk and compliance functions.
One of the best investments a firm can make is establishing a well-resourced compliance function that can successfully navigate digital solutions. Managing vast quantities of data with regulatory change and increasing cyber risk and threat from Big Tech is a catalyst for more widespread technological solution use in the coming years.
A regulatory intelligence survey and accompanying report provide unparalleled insight into the developing global regulatory approach and the direction and progress of risk and compliance functions in managing fintech, regtech, and insurtech. This enables firms to benchmark their views and preparations against competitors. Businesses should be aware of the risks they encounter, including complex synthetic and structured products, climate change, and cybersecurity threats. Issuers must disclose risks, enabling investors to make informed decisions.
