Financial Institutions and Regulators Alike are Showing Growing Interest in Fintech and Regtech Solutions.

Thompson Reuters | Zach Warren  | Feb 7, 2023

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As more and more financial services firms utilize fintech and regtech tools to make their operations more efficient and effective, regulators are too

• According to TRRI’s Fintech, Regtech and the Role of Compliance in 2023 survey report, which surveyed global financial services institutions about their fintech and regtech planning and use, fintech and regtech is being utilized for a wide variety of reasons.
  • For example, in fintech, uses involving information/data security were cited by one-quarter of respondents, while uses involving payments (22%), customer relationship management (21%), and credit risk analysis (16%) were also ranked as top reasons for use.

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• In regtech, meanwhile, cyber resilience was cited by 20% of respondents, while compliance monitoring (16%), financial crime/anti-money laundering/sanctions (14%), and onboarding (14%) also were ranked as the top reasons for usage.
  • Regtech is often seen as a subset of fintech, offering its own variety of technologies including compliance management, regulatory reporting, and risk assessment tools.
• Upskilling:
  • To operate these solutions, more than half of respondents (57%) said they have had to widen skill sets within their risk and compliance functions to accommodate fintech solutions. Nearly one-quarter (22%) of respondents reported going even further and investing in specialist skills for fintech tools, including 38% of all respondents in the U.S.
  • While fewer companies have invested in specialist skills for regtech tools (11%), nearly half (47%) still reported needing wider skill sets to accommodate these tools.
• Regulators are also taking a closer look at how those fintech and regtech platforms are operating.
  • “Technological solutions offer the possibility to deliver tremendous benefits and we should be ready to harness them,” said Elizabeth McCaul, member of the Supervisory Board of the European Central Bank, in a July 2022 speech. “But any technology solution needs to be buttressed by three pillars: an appropriate regulatory framework, sufficient supervisory oversight and […] a deep understanding […] not only of the potential but also the limitations and risks of new technologies.”

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• Ultimately, fintech and regtech can provide a host of benefits to an organization, including improved efficiency and speed of processing, improved data management, better risk monitoring and more. These solutions may even become a necessary requirement for the largest financial industry firms.

“More widespread use of fintech/regtech by regulators themselves means that firms of all sizes would be well-advised to initiate regular, in-depth conversations with their regulator on the use of fintech and regtech,” the report proposes. “This might help bridge the apparent disconnect between firms and their regulators.”

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