News & views

RegTech and Legacy - the path to better adoption

There are many benefits of using RegTech for the financial services industry, but there are also barriers that need to be overcome in order to make it successful. At the recent Regtech Automation and Compliance forum in London a major theme discussed was legacy system integration.

What can financial institutions, vendors and regulators do to ensure different types of technologies work together to enable the potential of RegTech to be realised?


First, let’s look at why financial institutions are adopting RegTech in the first place. Generally, firms that adopt RegTech are nimble, innovative and can swiftly solve existing problems, providing competitive advantage. They can automate manual processes, reduce errors, and have quicker access to accurate consolidated data and new insights.

Barriers to adoption

There are some RegTech solutions that can be deployed rapidly, such as identity verification. However, compliance and reporting tools require deeper integration and careful planning, including testing and roll-out strategies.

The adoption of innovative new RegTech solutions is not without challenges and the process of integrating them with existing technology and business processes generates its own issues:

  • Cross-business collaboration

Different business lines have varying standards for data management, security procedures and reporting standards. RegTech solutions usually span across business lines and implementation requires high-level strategic thinking, stakeholder buy-in and effective collaboration for it to be successful.

  • Saturated RegTech market

A common concern from firms is that because there is such a wide variety of RegTech solutions that serve similar purposes, it can be hard to see the wood for the trees. Firms struggle to decide which solution will provide a best fit to their specific requirements now and in the future.

  • Silo solutions

Many RegTech solutions have been created to address one specific business requirement or problem, but businesses have many separate problems to resolve within regulatory compliance and this leads to many different tools being implemented. With multiple solutions, multiple integrations are required, which can result in excessive maintenance.

This takes us on to one of the key challenges: integrating with legacy technology.

Legacy Issues

Many firms are reliant on operational systems that are built on older technology, which carries its own operational and integration challenges. The data required to populate RegTech tooling often originates or is processed by these systems.

Things become difficult when changes are required to these systems, such as capturing, extracting and processing additional data fields required for regulatory reporting. The timescales for development and testing of legacy systems combined with the cost of implementing changes can be prohibitive.

For many firms, it’s not a realistic option to re-write legacy systems within the short or even medium-term to allow for better integration with RegTech, so other strategies are required to solve this.  

Addressing the challenges

To enable easier integration of RegTech, there is a need for firms, vendors and the regulator to take steps to drive better adoption.

  • The Regulator

Regulators can help by providing better standardisation and common frameworks. For example, clear standards for APIs, reference frameworks and the provision of a common data dictionary.  This would allow RegTech products to use standardised components and identifiable terms, enabling better understanding within the market.

Better standards will drive greater confidence in firms leading the adoption of RegTech. When taking on new technology, firms are rightly cautious about being tied into a proprietary platform that locks them in. But with clear standards, a more open RegTech marketplace can evolve, where firms have the choice of which products to plug in and have the option to switch vendors if desired.

Regulators themselves are moving to digital methods to deliver regulatory requirements and thus have an incentive to assist both vendors and firms in using shared integration methods.

In the UK, the FCA have piloted Digital Regulatory Reporting (DRR) with the aim of reducing manual efforts required from all parties and to improve the accuracy of reporting. The Philippines Regulator (BSP) has also trialled this model and other regulators are likely to follow suit.

  • RegTech Vendors

RegTech vendors have shown that they can produce innovative solutions rapidly to meet specific use cases. While this speeds up entry to the market, it also leads to a fragmented picture where many different products are often required to meet the entirety of one regulation.

In the short term, better standardisation among RegTech solutions and the use of common data terms could lead to greater harmonisation between vendors making it easier to share data across solutions.  At present, many RegTech applications exist in their own silos with useful data and insights not fully exploited.

RegTech vendors can also look to provide more holistic solutions that offer broader functionality. Solutions could be focused around the ability to meet multiple regulations simultaneously with a centralised approach to integrating client data. Some vendors are taking steps in this direction and are moving to a platform-based model rather than single-point solutions.

  • Financial Institutions

The main challenge sitting on the side of financial institutions is how to integrate RegTech with existing legacy applications.

For traditional firms this is a significant challenge, but it is not insurmountable. The key is creating an architecture that enables data to be exposed via technology such as microservices to enable integration around the edges of legacy applications with minimal disruption to the core solution.

Data from legacy systems, once accessed via APIs, can then be consolidated centrally and used to populate multiple RegTech solutions as required.

Firms should look to employ consistent standards for managing and governing data as this enables users to understand data from disparate sources. It also allows for easier adoption of new tooling and future data requirements.

In a nutshell

Financial institutions have to adopt RegTech for a strategic edge. The business case is strong, particularly within regulatory compliance and reporting areas. Manual processing, data validation and workflows can be automated, delivering significant time and cost-savings while providing more accurate results.

Vendors, firms and the regulator are all making progress on the journey to greater adoption, but a move to standardised frameworks for RegTech will certainly speed up the process and build confidence. Financial services firms still have a challenge with integration but with the correct technology strategy they can successful embed RegTech into their ecosystems.

At DMW, we support clients with building the technology strategy required to enable the successful adoption of RegTech solutions. We use our technology expertise within automation, data extraction and microservices technology to accelerate transformation in a controlled and sustainable manner.

Transform your tech strategy


Rob McPherson



DMW's family day & National STEM/STEAM day 2019

On the 8th November every year, we celebrate National STEM day. But what is it, why is it important and how does it relate to a large ...

Read more

Microsoft Ignite 2019: Satya Nadella's keynote speech

DMW are at Microsoft Ignite this week, one of the world’s leading cloud conferences.

Rob Merrett attended Microsoft CEO Satya Nadella’s ...

Read more

How to manage multiple financial regulations with sustainable technology

With increasing financial regulatory demands ramping up technology & process requirements, there is a growing need for both financial ...

Read more

Raising mental health awareness in the workplace

We asked one of our Mental Health First Aiders, John Kendrick, to write about the importance of good mental health as part of World ...

Read more

SFTR reporting – identifying key challenges and how to solve them

The first deadline for the implementation of the Securities Financing Transaction Regulation (SFTR) is April 2020. In this article we ...

Read more

Market Abuse and Conduct Surveillance: Are you drowning in a sea of alerts?

A multi-faceted approach to transformation is needed in Financial institutions to combat market abuse.

Read more

Surveillance: Readying for the Seismic Shift

To date the overriding priority of surveillance in Financial Institutions has been one of coverage, but a seismic shift is upon us.

Read more

Stop trying to tame the data beast and learn to herd data critters

“The world’s most valuable resource is no longer oil, but data.” – The Economist, 2017  

Read more

Why celebrating Pride is more than just a banner at DMW

June is international Pride month, where we celebrate LGBT (Lesbian, Gay, Bisexual and Transgender) identities and highlight the work ...

Read more

Disrupt the digital challengers with transformation mindset

Transformation can no longer be seen as a one-off project, and for organisations to survive, it is becoming the new norm.

Read more

DMW on G-Cloud Framework

DMW delivers complex cloud migrations to public and private sector clients, supplying public sector organisations via the G-Cloud 11 ...

Read more

DMW welcomes... Naya Giannakopoulou

Happy International Women's Day! Over the course of recent months we have been delighted to welcome more brilliant women into the DMW ...

Read more

Helping our customers harness the power of cloud

We’re delighted to boost our cloud computing credentials with the announcement that we are now a Standard Consulting Partner in the AWS ...

Read more

DMW welcomes... Hani Qadiri

As DMW continues to grow at a blistering pace, we are welcoming more DMWers through the door than ever. Here is the first in a series of ...

Read more

The Cloud Brick Wall, Part 3 of 3

In the first two blog articles of our series from Konrad Petrusewicz, we started by covering the fundamental challenge of building a ...

Read more

CTO hot take from AWS re:Invent 2018

As the DMW Group team jet back from AWS re:invent, Amazon Web Services major cloud technology event in the states, we offer their ...

Read more

The Cloud Brick Wall, Part 2 of 3

An essential component of any Cloud migration is the actual code base that needs to be run and understanding how it operates within the ...

Read more

AWS re:Invent 2018 Keynote Hot Take

DMW are at AWS re:Invent 2018, the leading cloud technology event from Amazon Web Services in Las Vegas this week. Here’s our take on ...

Read more

The Cloud Brick Wall, Part 1 of 3

The Cloud Brick Wall is approaching. In this 3-part series of blog articles Konrad Petrusewicz maps out how to break through the brick ...

Read more