How Regtech is boosting agility and improving the adoption of emerging technologies  

The increasing regulatory burden placed on credit unions is costing them billions in compliance costs. According to the Credit Union National Association (CUNA), US credit unions spend more than $6 billion a year on dealing with regulatory compliance and this figure is growing by hundreds of millions of dollars every year.

Building societies in the UK also face complex and costly regulations with employing compliance staff typically being the largest single expense. Reducing these costs by even a relatively small amount can result in substantial savings for Building Societies and credit unions.

Regtech firm Suade Labs is at the cutting edge of Regtech innovation and is working with building societies to navigate the regulatory gap by utilising novel technology. Mansfield Building Society recently partnered with Suade Labs to meet its regulatory reporting requirements and embrace a more data-driven approach to regulation.

Diana Paredes, CEO and C-Founder of Suade Labs noted, “Mansfield Buildings Society subscribing to the Suade regulatory reporting solution is a great confirmation of the superior technology that powers our platform. Being a cloud native solution, we are able to offer our services fully on the cloud. This provides huge economies of scale to the customer and allows the ongoing cost of regulatory compliance to be reduced to a fraction of previous outlay thanks to automation.”

Compliance reports with mistakes or inaccuracies can add additional layers of complexity when dealing with regulators, which may mean more time spent on correcting even small mistakes. Automating previously manual tasks and other repetitious staff actions through process automation not only dramatically reduces the human error rate but it also allows skilled employees to focus their time on more valuable projects.

One of the main benefits Fintechs offer building societies is the ability to utilise innovative technologies such as Natural Language Processing (NLP), Machine Learning (ML), and Artificial Intelligence (AI). But embracing these technologies can’t happen in isolation with the core IT systems at building societies often needing to be upgraded if they are out-dated.

Gaining a comprehensive understanding of the return on investment for Regtech platforms and tools can be difficult with the newness of these technologies also sometimes putting off leadership from funding these projects. By measuring the time staff spend on regulatory issues before and after the introduction of a Regtech solution can be an effective method to calculate savings. Assessing regulatory fines before and after adopting a system can also provide insight into cost savings.

While building societies are partnering with Regtech firms to meet the current regulations they are contending with, they are also aware of the need to ensure these solutions are future-proofed and prepared for any new regulations that are introduced. The Financial Conduct Authority (FCA) have made it clear they are committed to fostering the development of Regtech firms and are working on new forms of digital regulatory reporting.

The FCA’s Digital Regulatory Reporting (DRR) initiative  is now in its third phase and the financial regulator is increasingly working with Regtech firms and financial institutions to co-design and test new solutions that will result in a reduction of the regulatory burden. A combination of a rapidly developing Regtech ecosystem and a growing number of building societies adopting Regtech systems is showing that building societies who don’t embrace these solutions are likely to be left behind competitors and can expect to have issues in effectively meeting regulations.

Written by Finbarr Toesland, Editorial Contributor

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