RegTech Insights 2022
Dash Regulatory Technologies is happy to have contributed to the RegTech research paper by Professor Andrew Sutherland of MIT (with global contributors), which explores compliance driven technology investments by financial institutions. At the outset, we would like to thank Prof Sutherland and his team for the opportunity to collaborate on this research.
In 2019, public U.S. based financial institutions spent nearly $10 billion on RegTech investments compared to just $2.2 billion on auditing. RegTech spend is forecast to grow at 35% per year (Juniper 2021). The insightful RegTech paper examines regulation across a subset of U.S. Broker-Dealers (B-Ds) to investigate firms’ RegTech investment response and explore how these investments affect operations.
The paper draws attention to the following key themes driving this surge in RegTech investments:
Regulation: Regulation had direct and indirect effects on technology adoption at affected B-Ds. It indirectly affected technology adoption by requiring new data investments, which could be leveraged for both compliance and non-compliance purposes.
Takeaway: FIs seek RegTech investments that yield large-scale benefits within the organizations.
Robust internal controls requirements: B-Ds must maintain controls for and documentation regarding moment-to-moment compliance with net capital requirements and to segregate customer assets (carrying B-Ds).
Takeaway: B-Ds prefer automated, robust and SOC certified solutions for increased transparency with both auditors and the regulators. This is driving the adoption of cloud-enabled RegTech solutions (DASH 360R is AWS-based SOC1 Type 2 attested platform).
Operational efficiency: RegTech vendors help firms comply with regulation and, in some cases, also bring about cost-efficiency as they use industry-tested technology at scale.
Takeaway: Using ‘plug & play and fully outsourced regtech solutions’ like DASH 360R, firms
– Dramatically reduce operational time on compliance processes
– Mitigate risk of manual errors and
– Reduce cost of onboarding IT resources to manage in-house compliance systems
B-Ds are increasingly relying upon RegTech solutions for compliance. DASH 360R – a fully modernized version of DASH’s gold-standard platform, LDB – completely automates the calculation and reporting process around regulatory capital compliance, easing one of the most significant back-office operational challenges faced by brokers and clearing firms.
Reach out to [email protected] to see how we can automate and optimize your RegTech needs!
