The FCA termed RegTech as “…a subset of FinTech that focuses on technology that may facilitate the delivery of regulatory requirements more efficiently and effectively than existing capabilities.” Simply put, RegTech can streamline compliance making it more effective and efficient plus provide tangible benefits such as cost and time savings.
The FCA’s new Director of Innovation Nick Cook made a speech this month stipulating that digital adaptation needs to be at the heart of the regulators strategy given the pace of technology-led change in the markets it regulates.
This means the regulator needs to become agile and focus on outcomes and adapt to remain relevant and fit for purpose. This also aligns with the FCA’s Exec Director of strategy and competition Chris Woodward’s recent speech on the future of regulation, which focused on the current regulatory models resilience to change post 2008 financial crises. Chris Woolard points to three factors that change the context in which the FCA operates:
Like Nick Cook, Woolard believes that the FCA is having to change and move away from a narrower compliance with the rules to a focus on delivering outcomes for users of financial services.
With such a focus on outcomes the regulator also needs to factor in what’s coming down the line and shape the inevitable next wave of change.
What are the FCA doing:
There are a number of initiatvies the FCA are involved in:
How can RegTech help?
What is not changing is the FCA focus on consumer protection, so utilising technology can help market participants due to:
One message that came through clearly from Cook’s presentation is that both financial services providers and the bodies that regulate them must act to adapt to, and enjoy the benefits of, technology and innovative approaches. This takes courage and a medium-term view so the real benefits that RegTech can deliver more cost and time efficient practice than current strategies.
So, with such benefits in a changing market, the question has to be asked: ‘RegTech, if not now when?’
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