More insight vital on regtech benefits


By Daniel Paperny

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Institutions were “drowning in information, but starving of insights” in the application and value of regulatory technology (regtech) in Australia’s $141 billion financial services sector, according to risk management advisory group Blackhall and Pearl.

Speaking at ASIC’s regtech roundtable for industry participants last week, Blackhall & Pearl managing partner Harry Toukalas said that regtech was “a real cost saver” for many institutions seeking to meet compliance obligations and proactively deal with systemic misconduct.

But he said its real promise rested in its ability to provide greater insights into existing customer data, influence behaviour and enhance the overall customer experience.

“There’s no question that compliance costs can be significantly reduced when it comes to adopting artificial intelligence and regtech,” Toukalas said.

“But regtech is much more than just an exercise in saving costs: it’s about deeper insights and data [as well as] using the technology to predict and shape human behaviour.”

While these benefits were clearly known to incumbent players, Toukalas said there was a lack of awareness over how the technology could specifically be applied within Australia’s principle-based regulatory framework.

“This may shock ASIC and APRA, but organisations aren’t exactly jumping at this and one of the reasons is they’re saying ‘we’ll wait and see what the regulators do’,” he said.

Blackrock Australia head of compliance Alison Telfer called on the regulators to build on regtech awareness and become more proactive in adopting the technology to help foster an industry-wide culture that supported compliance and did not see it as “a burden”.

“It’s [similar] to the debate around digital advice: I think the standpoint is that the requirements are no different for the non-digital world and while that’s helpful in terms of helping us understand our fiduciary obligations, it isn’t really helpful around using the language of technology for regulatory compliance,” Telfer said.

“Ultimately, if regulators want to support this then there needs to be a clearer or more profound statement of [them] believing in it … because that’s different to accepting it and I think then the support can become stronger.”

ASIC Commissioner John Price said that the regulator’s Innovation Hub had already engaged with 30 regtech companies to understand how it could be applied to assist financial services firms in meeting their compliance and regulatory obligations.

ASIC confirmed it would soon release a regtech report on its potential for helping build investor confidence and foster innovation in financial markets.

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