With an announced crisis on the horizon, why are companies investing in RegTech?

Cost-of-living crisis, uncertainty in the Fintech and Crypto spaces, ongoing war, political instability. These current buzzwords are nothing short of scary. They were certainly not what we were hoping for after the COVID-19 hurricane took us by surprise and soared the globe. We were looking forward to blue skies but are faced instead by a cloudy horizon.

Many companies, still scarred by the crisis in the past couple of years, are deciding It’s time to cut costs, hold on tight and hope for the best - again. While a cautious approach may be the most sensible route, there are technology investments that still need to happen, as they have the potential to help your company navigate this brewing storm and arrive safely to the other side. It’s now time to pick your battles!

Here are 7 reasons why financial services organisations are investing in RegTech now:

1. The Board will certainly be looking for efficiencies and cost reduction, and there will be a laser focus on areas that don’t directly bring revenue, such as risk and compliance. Automating certain aspects of compliance has the potential to cut costs by up to 30%, by reducing manual work, eliminating inefficiencies and allowing senior, more expensive staff to focus on strategic tasks.

2. The speed of regulations won’t slow down. If anything, changes might be accelerated in an unstable environment. You should be prepared to adapt, quicker than ever, at no extra cost.

3. Headcounts might be frozen - hopefully, you don’t have to cut personnel, but it’s quite likely that you won’t be allowed to hire for a while. By automating time-consuming, manual tasks, you can make sure your existing team is leveraged in the best possible way and is prepared to deal with an ever-increasing demand for compliance.

4. It’s a tough market out there. The great reshuffle doesn’t seem to be over yet. Great professionals are really hard to find and attract and even trickier to retain. Make sure you keep your stars happy by freeing up their time to do what they love, instead of burying them under boring, repetitive tasks.

5. With an economic downturn, who can afford unnecessary fines? Financial institutions across the globe are constantly being fined by staff transgressions, such as use of unauthorised social media at work and breaches in BYOD rules. With the right RegTech stack, you can make sure your compliance team is on top of updates and able to efficiently spread the word on what needs to be done to all members of staff.

6. If you’re lucky enough to be growing in this environment, you need to be ready to scale up in compliance. Launching new products, expanding to different geos, communicating with a growing workforce and so on will certainly require the compliance team to be agile and adaptable to emerging requirements.

7. Modern RegTech solutions are cloud-based and, as you probably know, this can translate into a much lower Total Cost of Ownership, as the cloud has lower infrastructure costs, and consequently requires lower maintenance. It can also bring flexibility to scale up, with shorter development and implementation times. 

Some companies are ahead of the curve, by considering effective compliance a competitive advantage, as they adapt to new requirements, avoid fines and prepare for expansion. They can now see that risk and compliance aren’t a mere cost centre hindering their ability to acquire new business, they are essential to sustainable growth in a heavily regulated industry. Where does your organisation stand and what are you doing to pave the way to strategic compliance?