RegTech – A Necessity for Financial Institutions

RegTech – A Necessity for Financial Institutions

Providing efficient solutions to compliance-related challenges through technology.

If we were to compare industries with superheroes, maybe the finance industry is our Spiderman. They know that with great power comes great responsibility. But along with the power, they also accept that they have the responsibility of managing people’s money right. With the finance industry managing tremendous amounts of money comes the responsibility of bringing transparency and trust into every customer transaction. Did you know companies have lost millions of dollars because they did not comply with the rules by agencies like FCA, FINRA, SEC and others? But if you are a financial service company and worried about these compliances, this blog is the right blog for you. Let’s start by understanding what RegTech is.

What is RegTech?

RegTech is the term used to refer to the new wave of technology and systems that help to ensure financial institutions comply with regulations and best practices. All financial institutions are already in compliance with regulatory requirements. However, compliance could quickly get more complex with a growing number of rules & regulations. RegTech can help financial institutions reduce costs, strengthen their operations, improve their monitoring and assessment processes and, in many cases, also reduce litigation risks. The definition of RegTech is based on the size of firms as well as their industries. For instance, "big banks" usually undergo stricter compliance standards as the industry has stringent compliance requirements.

The primary role of RegTech companies is to provide efficient solutions to compliance-related challenges through their technology. They are highly accurate, reduce risks, and monitor transactions smoothly. Moreover, it safeguards financial records and is compliant with the latest taxation laws and regulations. As a result, the importance of RegTech company and software has increased remarkably over the years, and they are now helping companies save billions of dollars. For example, these tech softwares helped companies save $118 Billion by 2020. (source)

“FinTech is there to make firms more cutting edge and competitive and give them their competitive advantage. RegTech is there to use technology to solve regulatory problems. It’s not a trend, and it has to be there and not just in financial services” – Nirvana Farhadi.

What happens if you do not have RegTech?

There is an urgent need for financial companies to switch to new technological trends to maintain their profile. Banks who don't have the expertise to deploy regulation technologies may be less prepared for a lawsuit on the financial product that they are selling, which might ruin their reputation in the long run. Why is RegTech so Important? RegTech is considered an essential aspect for financial companies struggling to be compliant with legal requirements. The top complaint FinTechs have is the lack of regulatory compliance, which has increased calls from regulators to assist them in protecting them against liabilities and litigations.

One of the recent laws formulated by FCA, FINRA, SEC is that all the companies in the financial sector have to keep track of all electronic communication provided by them to their customers. However, companies still did not have a supervisory mechanism to keep track of all of these communications, making them lose Billions of dollars.

Recent Examples of the losses companies incurred because they did not have RegTech

E.g.1 - In April 2015, WealthForge, LLC was fined $100,000 for failure to use an adequate supervisory system that captured, reviewed and retained social media communications used by its representatives. (source)

E.g. 2 - Scottrade Inc was fined an astonishing $2.6 million for failing to implement a supervisory system or retain securities-related electronic records in the required format stated by the rules. (source)

What RegTech should you select, and what should be your selection mechanism?

This is not a for-profit business. Establishing a compliance department is a high cost, but that is necessary to fulfil your regulatory obligations and protect yourself and your clients from the regulatory risk. But, there is a right way to do it. Your time and resources should be invested in RegTech to improve your internal operations to reduce the risk associated with clients, reduce the compliance burden off your internal team, and reduce the risk to your organisation. For this to be successful, the solution should: Provide you with the capability to capture and store all the electronic communication done by the organisation in one place.

Here are some essential features your RegTech should definitely have

  1. Capability to store all the website content, no matter how deep it is, if it is on the website, it is to be captured.
  2. The capability of capturing all information sent to customers on the website while they are committing a transaction.
  3. The capability of keeping these screenshots secure and readily available in case a lawsuit is filed against the organisation.

Stillio - The right choice

Here’s where we would like to introduce you to the trustworthy RegTech that can help you. Stillio - software that can capture screenshots of your public content at stipulated timings. This helps analyse and verify the content you have written on the website, solve any errors, and safeguard your organisation and clients’ interests.

Here’s why Stillio should be your prime choice

  1. Compliance friendly recordkeeping - Stillio can make sure it records all your public content and stores it so that you can easily use them to comply with FCA, FINRA norms.
  2. Most accessible to setup - Stillio is really easy to set up; all you have to do is provide stillio the URL and the capture interval of the screenshot you want to take, and you are sorted. It can also allow you to take screenshots with/without popups based on your choice.
  3. eDiscovery preparedness - It keeps you prepared for eDiscovery and makes your search for evidence faster.

You can read more about Stillio and try our service completely free for 14 days.

You can also check out how Stillio helps the companies in the financial industry or book a demo.

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