JWG RegTech Capital Markets Conference 2019 Recap Blog
Synechron was a key sponsor and exhibitor at the 2019 JWG RegTech Capital Markets Conference in London. With over 250 senior-level executives and decision makers in the room, the event brought together of some of the RegTech industry’s key influencers and leaders to discuss the current state of the market, key trends and what the future holds for regulation within the financial services industry. The list of attendees were delegates from tier-1 institutions, including: Credit Suisse, HSBC, Deutsche Bank; challenger banks, including Revolut; RegTech startups Kaizen, Digital Reasoning, and the Financial Conduct Authority (FCA).
Throughout the event, the three key trends the Synechron team observed, included:
Data Standardisation – The increasing importance of data is prevalent within each sector of the financial services industry. Access to clean, structured and usable data can help firms promote quicker decision-making and reporting that can lead to a consistent set of results to present to the regulator. Clean data minimises the risks firms face and helps promote transparency within an organisation. However, when coupled with legacy technology, having access to a clean set of data is difficult. Financial institutions and regulators need to come together to develop a set of standardised data models, including the standardisation of data fields and formats for the information they collect from the industries that they regulate.* This requires collaboration amongst financial institutions and regulators to share data models but firms remain reluctant to share their data with one another. Key players in the industry need to transform their existing ways of working in a silo and adopt a collaborative approach. Additionally, if there are blockchain consortia (i.e., R3), the RegTech industry should consider following in the same footsteps because without good quality and clean data, RegTech solutions will not work or create the change they are designed to make.
AI/Machine Learning – The use of AI can help firms pinpoint what type of data is relevant; however, before machine learning models can even be considered, data needs to be cleansed and normalised. Existing processes, including inadequate records management, have cost individual financial institutions hundreds of millions in regulatory fines stemming from failure to retain or produce upon request key documents and information. Clean data, coupled with AI, can help relieve the manual effort that has become the industry norm. However, machine learning also can pose concentration risk, if there are a low number of AI vendors or if multiple institutions rely on the same consortium. The industry will need to work together in order to better understand how to navigate any potential risks or failures and to ensure the integrity of the data is maintained.
ESG – Environment, Social and Governance (ESG), is rapidly coming to top of mind for many financial services institutions. The Financial Conduct Authority (FCA) is beginning to place a larger focus on the increasing growth and importance of green finance and has started to seek greater reassurances that financial institutions begin to account for risks inclusive of climate change. As a result of green finance becoming a larger area of focus for financial institutions, the FCA is looking to play a key role in providing the necessary structure and protection to consumers for green finance products and to ensure the market develops in an orderly and fair way that meets users’ needs.
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