5 Things To Do To Make Your RegTech Partnership Successful
If you’re on the board or management team of a traditional financial or insurance institution, chances are you’re already in the early planning stages to partner up with a RegTech provider.
After all, hiring an entire tech team to take on the challenges of navigating constant regulation changes and jumping over compliance hoops is not an efficient or cost-effective solution.
Before you can truly integrate or adopt RegTech into your existing setup, we’ve narrowed down some steps to follow to make the adoption process go much more smoothly.
But First, RegTech 101
What is RegTech?
RegTech is short for “regulatory technology” and was coined almost four years ago in the U.K.
Since then, it’s sprung new technologies that help banks, financial institutions, and government agencies meet regulatory demands for reporting, monitoring and managing compliance risks, all while saving those entities time and money.
In recent years, we’ve especially seen a growing number of traditional companies employ RegTech solutions to integrate with and transform their businesses, in lieu of upending their legacy systems or intaking more IT team members to work through internal compliance challenges.
At its true essence, RegTech aims to solve for the “three C’s,” which are compliance, cost, and complexity.
Five Steps For RegTech Adoption Success
Adoption of a RegTech solution can and must be a well-managed and carefully thought out process.
Follow these steps to make it a success:
1. Define targeted use cases
Define fit-for-purpose use cases that demonstrate a strong return on investment (ROI) to help drive and convince others of your business decisions.
Map out the immediate benefits that RegTech solutions can offer. Take, for instance, anti-money-laundering (AML) solutions that have delivered the following benefits:
• Have met a specific, complex regulatory requirement
• Reduced false positives
• Created a more accurate and efficient reporting and audit trail
• Monitored, spotted and stopped high-risk transactions
2. Prepare Existing Systems For The Transition
Evaluate whether your existing systems can integrate seamlessly with APIs and anywhere due diligence or know your customer (KYC) information is stored -- for example, in your CRM software such as Salesforce.
• Plot out your requirements, what rules you want to implement and what data you want to see before meeting with the implementation engineer; this will make for a faster and more seamless onboarding process.
• If your existing systems aren’t entirely ready for integration, move to an open architecture that facilitates an easier introduction of RegTech into the organization.
• Consider the use of a trial phase or test environment known as a QA environment or sandbox. Such programs can help you decide if the solution is a good fit; you might find it can help accelerate innovation and get new products to market quicker.
3. Assemble A Team Of Experts
When implementing a flexible and reliable RegTech solution, it’s best to have individuals around who possess significant compliance and risk expertise as well as a deep understanding of technology.
• Nominate or assign an account or project manager that understands your company’s full compliance needs and knows the language of your business.
• Install an implementation engineer who can speak to your technical team and who knows the ins and outs of integration.
• If your RegTech solution impacts any customer-facing components of your business, then train and prepare your client service individuals with the right terminology, use cases, and experiences so they are accessible, adept and responsive to what’s ahead.
4. Know Your Business And Your Clients
Every business is different; suspicious activity at one place can be considered business as usual at another.
• Ensure your RegTech tools are configured to suit your business and tailored to your clients and customer profile.
• Set your system up to provide comprehensive management information and be dynamic enough to adapt when requirements or risk appetites change.
• Train your in-house staff sufficiently so even non-IT or technical persons are able to recognize and complete these tasks.
5. Get Everyone On The Same Page
Regulatory software can result in an ROI of 600% (or more) with a payback period of under three years. But you’ve got to invest time and resources upfront to benefit from such gains.
• The scope of work, time frame and exit strategy for the proof of concept (POC) with RegTech companies should be agreed upon upfront.
• Consider streamlining the POC approval process and creating a “fast track” procurement process for RegTech companies.
By following these recommended steps, this little bit of upfront planning to prepare for your RegTech adoption may result in outcomes that will go a long way, exceed expectations and deliver stellar results.