As controllers face an evolving regulatory environment, they’re turning to new solutions to improve their efficiency. Regulatory technology, or simply “RegTech,” encompasses a variety of different applications to ensure compliance with current regulations, including monitoring, reporting, data management, and fraud prevention.
How is RegTech shaping the future of corporate finance?
The Expanding Role of RegTech
Technology is playing a larger role in regulatory compliance, particularly in the financial world inhabited by controllers and chief financial officers (CFOs). RegTech is designed to enhance operational efficiency in three key areas.
Monitoring
RegTech has a central role in monitoring both your workplace and the broader regulatory environment. At a minimum, technology can be used to monitor regulatory changes and alert you to evolving industry standards. But many RegTech solutions can also monitor your internal processes and even monitor your employees to identify or prevent unethical behavior.
Reporting
Controllers and CFOs are commonly tasked with preparing regulatory reports. RegTech streamlines the process by automating both the creation and submission process. By integrating RegTech into your company’s ERP software, you’ll have instant access to the data you need to generate reports and maintain a clear audit trail.
Compliance
Your RegTech can also monitor key aspects of your business to ensure compliance with established standards. Depending on your platform, you may have access to real-time updates that alert you when you’re not aligned with compliance requirements.
How RegTech Benefits the Corporate World
On the surface, RegTech may simply seem like another administrative tool. But controllers, CFOs, and other corporate leaders can use RegTech to drive their business forward and maintain a competitive advantage. Here’s what to expect from these emerging technologies.
Streamlined Compliance Processes
First, RegTech truly does streamline your compliance processes. Automated reporting features and secure data management features help C-level leaders monitor their business, generate reports, and highlight areas of risk all through a centralized platform.
These innovations make it easier to keep up with shifting regulatory standards and provide proof of compliance at the mere touch of a button. As a result, corporate teams can spend less time on administrative work and focus more on the decisions that keep the business moving forward.
Reduced Risks
Penalties for regulatory violations vary — by the standard as well as the industry. Violators may face fines or even the loss of licenses, not to mention the impact that such violations can have on your public reputation.
RegTech can help you monitor your compliance standards and ensure that you’re taking the appropriate measures to meet these standards.
Improved Data Security
While some risks stem from unethical business practices, others come in the form of cybersecurity risks. Business leaders are rightly concerned about their readiness to face a cyber threat. RegTech may not prevent these attacks, but it can ensure that your company has taken measures to mitigate these threats and protect company/customer data.
Prevention of Money Laundering
The advanced monitoring features of RegTech can identify unethical behavior such as money laundering. In fact, even the possibility of being monitored and caught may serve as a deterrent for would-be criminals. Controllers and CFOs may therefore integrate RegTech into their broader Anti-Money Laundering (AML) strategy.
Enhanced Reporting Accuracy
Because RegTech relies on internal company data, you can be confident in greater accuracy in reporting. Integrating your RegTech into your other software ensures that your reports are based on the most accurate, up-to-date information so they reflect your company’s real financial situation.
A Clear ROI
Does RegTech deliver a solid ROI? Just consider the cost of not implementing regulatory technology.
Satisfying evolving requirements can be challenging, requiring you to devote time and personnel to adapting to these demands. And that’s to say nothing of the costs of regulatory missteps. By choosing a RegTech provider that aligns with your key risk areas, you’ll be able to see an ROI based on your ability to maintain compliance with all present and future regulations.
Case Studies: How RegTech is Improving Business Operations
Two case studies stand out as examples of how RegTech is enhancing business compliance.
Citi
After the bank failed two of three annual stress tests, it partnered with a company known as Ayasdi. It was able to reduce its personnel requirements to less than 100, and it reduced its assessment time from nine to three months.
HypoVereinsbank
After implementing IBM OpenPages, HypoVereinsbank reduced the need for compliance personnel by 33%. As a result, the bank was better able to allocate resources and solve recurring problems identified by the RegTech solution.
The Future of RegTech
Just as your regulatory challenges continue to evolve, so does the world of RegTech. Controllers, CFOs, and other corporate leaders should consider investing in technology that grows with you as you face these challenges.
In the end, maintaining these compliance requirements can keep your business moving forward while you set yourself apart from the competition.
Additional Resources
International Financial Reporting Standards (IFRS): Adoption and Impacts on Corporate Finance
Global Financial Compliance Trends in 2024: Staying Ahead in a Changing World
