Governance, Risk and Compliance

The Impact of Tech on Regulatory Compliance in 2018

By Resolver Modified February 7, 2021

While just about every business is shifting in some shape or form, the regulatory compliance industry is undergoing a revolution. Keeping pace with legislative changes, consumer behaviour, and technological advancements has become very challenging for many Canadian financial institutions.

As new (and old) technology continues to disrupt the industry, we wanted to take a closer look at the biggest trends and growth areas for 2018.

RegTech

Many believe that RegTech is an opportunity for financial institutions to catch up to emerging technology. While the cost and complexities of running an internal compliance program have increased, many functional areas have started to see overlap between control data, and have uncovered the critical need for process and standardization. Financial institutions are turning to GRC (Governance, Risk and Compliance) software for help.

Resolver’s Regulatory Compliance app enables an easy flow of data sharing and coordination, that builds a workflow process and establishes standards for measuring risk.

At the 23rd Annual Regulatory Compliance Conference for Financial Institutions, Carolyn R. Ibele, Director, Compliance AML & Compliance Division, Office of the Superintendent of Financial Institutions (OSFI) said:

“COOs rely on control function areas such as marketing, finance and accounting, which often do not demonstrate a reasonable process that is reliable or verifiable. This results in a lot of additional work for CCOs.”

As Carolyn R. Ibele points out, regulators have found that without a proper process put into place, attestation becomes a big and costly problem for many Chief Operating Officers.

An additional benefit of adopting RegTech at your FI is the ability to see key metrics and build comprehensive reports in real-time. Dashboards are increasingly becoming robust and leveraged at board meetings. On the day to day, they provide a quick snapshot into the health of your internal compliance program.

In a recent case study, Pam Huggler, Chief Compliance Officer at Street Capital Bank stated:

“The data we get out of Resolver allows me to demonstrate where we are compliant, where we are not, and for the areas that we are not, we can clearly show why. You would need 50 spreadsheets and 30,000 VLOOKUP’s to get all that information.”

A tech solution can make everyday headaches–such as escalating information between compliance teams and subject matter experts, or putting together a board report–painless. We see the adoption of a GRC solution as a must-have for Canadian FIs in 2018.

Cloud Computing

Cloud technology has become widely adopted by many businesses because of its cost and flexibility. Financial Institutions are some of the most regulated companies in the world. Balancing outdated but reliable software with the changing needs of consumers and technology is a growing concern for many FIs. By choosing to play it safe, the greatest benefits of the Cloud are missed and customers are left disappointed.

“61 percent of respondents said their cloud adoption strategy (in the financial institutions sector) is still in formative stages.”

– The Cloud Security Alliance

A number of banks worldwide are deploying cloud-based applications in test environments. For large companies, it is common to see change start with a small project and scale as confidence in the new technology grows.

One of the largest hurdles FIs face when it comes to choosing the Cloud are regulatory compliance constraints. Storing and collecting personal data makes banks extremely vulnerable to breaches and security threats. The General Data Protection Regulation (GDPR) requirements are expected to establish a common set of standards for consumer rights regarding their data. With this new legislation comes an increase in penalties in the event of a breach and gives consumers more control over their personal data.

The push for Cloud computing will continue to dominate the IT tech space in 2018. GDPR will drive FIs toward taking greater responsibility for their data and encourage FI to revisit their cloud adoption strategies with full steam ahead!

Blockchain

The pace at which cryptocurrencies such as Bitcoin, Ethereum and now Ripple have boomed, have left many in the financial sector shocked. Not only are the crypto assets themselves disrupting the current economic structure of how banks and financial institutions operate, but the underlying technology, Blockchain, is also creating a massive impact in this space.

Before a blockchain can achieve a consensus on its ledger, the record is verified through a protocol. This essentially boils down to many machines solving a cryptographic problem with brute force. Once a block (or record) has been accepted into the ledger via a solution produced by the machine, it’s considered verified and remains permanently in the blockchain without alteration.

 “In 2017, blockchain and cryptocurrencies became too big to ignore. In 2018, they will become too big to fail.”

– Don Tapscott, Co-founder and Executive Director at Blockchain Research Institute

What does this mean for compliance? Blockchain has the potential to make data more accessible, transparent and immediate, with the promise of security. Since blockchains are immutable, the technology could be leveraged to provide records of proof of process to regulators. This would allow financial institutions to better manage their internal compliance programs and report verifiable information to regulators.

An exciting and important year lies ahead for Canadian financial institutions! Don’t get left behind. Request a demo of Resolver’s Regulatory Compliance app to learn how technology can benefit your business in 2018.

Resolver

About the Author

Resolver Protects What Matters®. Over 1,000 of the world’s largest organizations use Resolver's cloud software to protect their employees, customers, supply chain, brand and shareholders.