The ROI of RegTech

By FINTECH Books Contributor, Brad Maclean
Follow: @RegulationAsia

Change and the bottom-line cost of regulation has been a top-of-mind issue for most financial institutions for some time. Institutions are troubled not only by the investment and roll out related to regulatory compliance, but with a spate of high-profile multi-billion penalties which highlight the potentially massive impacts of non-compliance.

More and more we are seeing a shift in focus from controlling compliance spending to mitigating the cost of non-compliance instead.

Based on 1680 meetings and 4232 research interviews over the past 24 months with major bank compliance and regulatory affairs officers, executives and technologists, this chapter will explore expectations of return on investment (ROI) when implementing RegTech across financial institutions.

Key to the discussion will be a reflection on the future of compliance spending by financial institutions, from the tipping points which drive the application of technology solutions, through to the key objectives and overall ROI expected from implementing a new regulatory compliance innovation.

From closing the initial compliance interpretation gap to the development of the business-use case, the decision to invest in RegTech to ease the compliance burden relies on determining its knock-on effects.

From identifying surplus systems and processes to cross-broader impacts and requirements, as well as recognizing the specific roles and responsibilities across product and functional compliance that have not only changed but will continue to evolve as new regulations are rolled out.

How should executives set their ROI expectations for RegTech, and plan to translate its implementation into efficiencies gained that also correlate with top-line revenue growth?

In evaluating RegTech initiatives, the focus has shifted from tactical to strategic, with the aim of creating lasting competitive advantage.