Steady advances in data collection have allowed the continued evolution of RegTech – the management of regulatory and compliance through technology – to the point where it is now becoming extremely useful for financial services organisations. But where is RegTech heading? The Manager of our Compliance desk, Jackson Baker, sat down with Dave Ackerman, a Regulatory Subject Matter Expert at Nice Actimize, the largest and broadest provider of financial crime, risk and compliance solutions for regional and global financial institutions, to hear his thoughts on RegTech and the future of compliance.

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JB: Dave, what are your thoughts on striking a balance between tech and human experts in compliance teams?

DA: I think there will always be some form of human interaction in compliance, but technology is only as good as the people using it. The balance will be finding technology solutions that are malleable enough to adapt to multiple styles or regulatory interpretations.

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JB: So, in your mind, what is the ideal balance – if there is one?

DA: The "ideal" balance will be to automate as much of the mundane tasks as possible. In the future, companies may even consider using bots to analyse on-screen work patterns and discover additional areas to automate. In a perfect compliance situation, a human ‘actor’ would do little to no data collection at all, instead focusing fully on analysis and validation.

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JB: It definitely seems like the balance is shifting. From your experience, how has the RegTech space evolved over the last few years?

DA: Well, more data is being collected now than ever before in human history, and financial regulators require more information to be captured with each new rule. As a result, the RegTech space is now, for perhaps the first time, actually sophisticated enough to keep up with all this information. From 2008-2020, the focus was on simply capturing the information, but from 2020 on, the focus will be on what this information is telling us.

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Big data is not necessarily good data. Cutting-edge technology that uses processes such as machine learning, AI, and advanced analytics can now help compliance officers sift through the noise and find what is relevant.

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JB: Absolutely. And what are the most recent advancements you’ve seen in the RegTech space that have really made a difference?

DA: Machine learning and AI are two tools I’m interested to watch develop – whereas before, these were almost just buzzwords, actual tools are now available to next-gen compliance teams and they are starting to be used more and more.​

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Cloud technology is also a game changer for me, since it addresses two massive headaches for compliance officers:

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• siloed data information

• constant hardware upgrades and data migration requirements

• Remedying siloed data and legacy technology are common barriers to technological upgrades because they are very costly endeavours. Cloud not only allows for full data accessibility from a centralised location, it can also perform upgrade and migration functions for multiple user groups in the background, while also being centrally managed.

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JB: And in your mind Dave, how can a Compliance Officer increase efficiency by using this new technology?

DA: Over and above what I already mentioned, the new mandate within financial services and beyond will be to give compliance teams the tools needed to actually do the jobs they are hired to do! In the next five years, I’m confident that the idea of spending hours or days looking for information to analyse will be all but eliminated in the top firms.

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JB: Wouldn’t that be nice! And finally, bearing the current climate in mind, how have you seen the RegTech space change to adapt to remote working?

DA: Remote working seems to have catalysed general engagement with RegTech practices. Suffice to say, the key adaptations I’ve seen are:

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• ​Faster adoption of cloud platforms

• Greater focus on analytics to identify malfeasance

• Updating of legacy technology and processes to address the current environment

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After implementation, organisations have proved that they work to regulators – this may well be a huge step in evolving working and regulatory practices across the board in the next few years.

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JB: Given these trends, what skills would a compliance executive need for the future?

DA: I can think of three main ones:​

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• Obviously, an in-depth knowledge of the laws and regulations in the firm’s jurisdiction.

• Experience with RegTech and how the process of tweaking is achieved. Ideally, an individual would also have exposure to the internal R&D team or experience of working with development teams.

• A stellar reputation and personal connections with regulators are a must. That relationship will effectively guide a program’s success and technology development. Ultimately, those relationships separate a good compliance program from a great one.

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In short, it seems like after 15+ years of preparation, the technology has now caught up with the ideology: RegTech is finally about to start making big changes within the financial services sector, and we’re looking forward to seeing a whole host of new data possibilities opening up in the future.

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From a recruitment point of view, it seems like RegTech will change how teams are structured and ultimately increase the barrier to entry for junior compliance positions. Junior compliance members conducting mundane, process-driven tasks will become less demanded with their tasks being completed by a piece of RegTech. On the flip side, technology skills and the ability to interpret and advise on data will become increasingly valuable to a compliance team. This may mean we will start to see a rise in alternative educational backgrounds in Compliance.

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Contact

Is your business starting to look at adopting more RegTech processes and free your teams up for more efficient data strategising? Maybe you’re not quite sure where to begin?The Rutherford team can help. We have a wide pool of compliance experts ready to start implementing change within your business – contact us for a confidential search, send us an email at enquiries@rutherfordsearch.com, or see our latest vacancies.