How to manage multiple financial regulations with sustainable technology

Posted by Rob McPherson, Principal

With increasing financial regulatory demands ramping up technology & process requirements, there is a growing need for both financial institutions and vendors to devise a more sustainable approach to handling multiple regulations.

A key frustration we hear from clients is the constant need to develop or integrate new tech for each regulation. Indeed, for a single regulation, customers need to link together multiple systems, integration points, data sources and workflows. 

To have to repeat and reinvent this process for each additional regulation is becoming unsustainable, and a better alternative is needed. 

It would seem like an obvious approach to build a central platform to manage multiple regulations and their reporting obligations. In practice, this rarely happens: organisations are spending their time battling through the immediate regulatory and compliance requirements and often don’t have the breathing space to look further ahead.

Some of the common barriers we have come across include: 

Deadline Pressure

The need to meet short-term deadlines often forces a tactical approach to developing solutions. This leads to a ‘plaster’ solution that addresses the immediate need to comply at the cost of efficiency and scalability.

Business Silos 

Business lines can be physically separate and operate using different systems, data and integration points. They may look to develop their own solutions independently and each business area tends to focus on its own challenges rather than the common good.

Legacy Technology

For many firms, simply getting the data they need from their existing estate can be a significant challenge due to legacy technology constraints. This does not make it easy to expand the view beyond meeting the most immediate regulatory demand.


Read next:

SFTR Reporting - Key Challenges and Solutions

RegTech and Legacy - The Path To Better Adoption


 

What can be done to solve these issues? 

The reality is that these challenges will continue to drive many firms’ approach. However, with a smarter use of technology, a sustainable, long-term strategy can be developed. Here’s how:

Overlying Regulatory Technology Strategy

Business lines will continue to act independently unless an overlying Regulatory Technology Strategy is developed with collaboration between business stakeholders. This allows for a longer-term approach that makes best use of available resources to deliver against the organisations’ regulatory needs rather than a unit by unit approach. For this to be successful, senior buy-in and sponsorship is essential, with ownership moving out of individual business units.

Standard Approach to Data Management

Many of the issues encountered involve the management, control and access to data. While data sources may differ by business line, common standards, governance methods and tooling can be adopted to make current and future integrations cleaner and simpler. 

Adopting new technology 

Data, access, processing, storage and availability will always be core challenges, but the technology is available to address many of these problems. Adopting a microservices approach can help standardise interfaces and minimise the work required on integration points. This will allow standard data structures and processing technology to be reused. Workflow automation can be developed with standard components that can be plugged in to meet new requirements. 

In a nutshell 

With regulatory demands multiplying, there is a compelling need to look to more sustainable technology solutions that can cater for multiple regulations. 

For this to be successful, it will require better collaboration and cooperation between business units, shared standards for key concepts such as data management and in some cases an overhaul of existing technology.  

At DMW, we work with clients to deliver a Regulatory Technology strategy that enables the most efficient use of both existing and new technology to provide a sustainable, centralised approach to managing multiple regulations.

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