#regtech #regulatoryreporting #regulation #sandbox #openapi
Is it possible to provide regulatory reporting services for all of the world’s regulations?
300+ million pages of regulatory documents will be published by 2020. (Mesropyan, E. (2018, June 6th). How European Banks Are Using RegTech Solutions. Retrieved from Medici: https://gomedici.com/how-european-banks-are-using-regtech-solutions)
That’s a BIG number irrespective of how scaleable a vendor’s solution is. Matters get further complicated when you consider the differing ways in which regulated firms submit reports and likewise, the variance with which the different regulators collate and aggregate. They all have their own processes and systems and there is very little uniformity across the sector. Indeed, any sector.
I recently spoke to a Chief Examiner (who will remain nameless) from a well known Central Bank who was of the view that standardised regulation is a “nice to have”. The Examiner in question didn’t believe it to be a real problem. My view is that in mature markets where the volume of institutes is higher than others and where you have multiple regulators in the same country with overlapping remits, you need to be able to align otherwise the cost of regulating will go up.
The challenge I saw from a recent sandbox is that there are those who expect all regulators across the globe to provide institutions with a single, aligned data model for reporting! To my mind, this simply has to be accepted as the cost of doing business in other markets.
So, there’s too much regulation, too many ways of submitting reports, too many ways of collecting data. It doesn’t make sense for a vendor to try to fix it all. It does however, makes sense to chose a specific regulation to specialise in and be all-encompassing. In effect, this very much aligns to the gig economy ethos.
Linked to this and as a final point, open API is the way to go. Banks are not going to be supplanted by start-ups overnight but they will die a death of thousand papercuts if they fail to adapt. One way in which start-ups are doing this is by taking bits of a life cycle, offering API transparency and giving customers the freedom to plug their solutions in. That’s collaborative, it will generate adoption and will provide a much greater degree of flexibility than traditional approaches where interaction with systems is too opaque and is being monetised.