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A City of London Corporation report has called on regulators to help step up the use of RegTech. The research claims that the annual cost of compliance could be cut significantly by the greater use of technology. While regulators are supportive, they have made it clear it is not their place to take the lead.
The report called for the removal of barriers to engineer a ‘paradigm shift’ in the use of RegTech. According to the research, use of new technology is being held back by long procurement cycles, slow decision making, lack of awareness about RegTech, constraints from existing technology, and lack of funds. “We are calling for more to be done to support the sector to grow and thrive, strengthening London’s global competitive offer and benefiting the wider UK economy,” Catherine McGuinness, head of the City of London Corporation, said.
However, according to the regulators, this is an issue for industry to address through working together.
“A technology shift that is led by a small number of people in the public sector making choices does not strike me as a good technology shift,” Bank of England Deputy Governor Sam Woods told a launch event for the report.
And Sheldon Mills, the FCA’s executive director for consumers and competition, said “Supporting individual firms or individual technology is not necessarily where we are at…it’s up to the market, up to the firms, to go out and make that happen.”
Adriana Ennab, director of public policy Europe and UK at Credit Suisse, speaking from an industry perspective, said firms should not be building their own silos, but coming up with joint solutions given areas like compliance were not “competitive” issues.
61% of attendees at Bovill’s first RegTech event in May 2020 said they believed Covid-19 would accelerate the use of RegTech.
And a January 2021 report confirmed that the pandemic was speeding up change in this area. Released by World Bank, with the Cambridge Centre for Alternative Finance, the report spoke to regulators across 114 jurisdictions. It found that around 80% of regulatory innovation initiatives have been impacted in some way by Covid-19 – and typically they had accelerated.
This month’s comments from the regulators, tech providers and firms alike, point to the growing need for the industry to work together to develop solutions to help make compliance more efficient and ultimately financial services firms better serve the public.
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As a trusted client-side adviser, Bovill has focused on exploring the RegTech universe and understand what our clients are looking for, developing an overview of emerging best practice, and partnering with firms who can best serve our clients. We believe that the most successful RegTech deployments combine the best platform technology with specialist regulatory expertise and we work closely with other service providers and industry bodies to share experience and ideas.