Published: 08 October 2019
Author: Jean-Jacques Le Bon
Following the 2008 financial crisis the field of banking regulations was extended from the traditional objectives of financial stability to the fields of consumer protection and the provision of an innovation framework. This has led to new legislation on a global scale, encouraging new usages (crowdfunding, crypto-assets, SaaS, BaaS), facilitating the emergence of new entrants (fintechs) and defining new standards in risk management (KYC, AML-CFT).
An immediate consequence of these new regulations has been a significant increase in regulatory material: a growing number of texts, consultations, white papers and Q&As have become a common practise to help, often novice, practitioners to best interpret the new framework. However, it is a great challenge for both incumbents and fintechs to keep up with regulation as being compliant often means investing in expert resources and IT. A need to master increasing complexity due to new technologies, products, and handling the dilemma between managing a global company, and being capable to adapt to country’s local specifics, exists.
Today, regulation expertise is provided by a number of specialized consulting and law companies. These traditional players are about to see their expertise disrupted by a number of foreseeable market trends: AI (Artificial Intelligence) will simplify the editing and manipulation of texts. This will significantly reduce time spent in regulatory monitoring and benchmarking. Platformization of IT providers will make it easier for incumbents and fintechs to integrate regulatory services (RegTech), such as reporting / KYC / AML-CFT to their systems. Collaboration between stakeholders in the regulatory field (regulators, lawmakers, compliance officers) will be facilitated by technology (LegalTech), redefining how expertise is managed, and allowing everyone to have a better and more practical grasp on regulation.
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