1. Putting RegTech in Focus GRCTC 3rd Annual Symposium
Professor Tom Butler
GRCTC Principal Investigator & UCC Professor in Business Information Systems

2. “I’d like to introduce Professor Tom Butler, who’s no spring chicken…” Peter Oakes, RegTech Leaders Forum 2017
My grandkids…
My friends?
Peter Oakes?

3. The Regulatory Problems
Scale
Over 50,000 regulations published across the G20 since 2009 alone
Average of 45 new documents every week
MiFID 2 has generated 30,000 pages of regulatory text
Dodd Frank 22,000 pages
FCA Handbook 7 ½ feet high
Staggering levels of complexity
Costs
$321+ billion in fines incurred in the period 2007–2016
$100 billion market? That was spent in 2016 on regulatory compliance by all financial services institutions
Retail Banks spent over $200 billion
15 percent to 20 % percent of “run the bank cost,”, and 40 % percent of “change the bank costs”
What about regulatory capital and risk capital and opportunity costs for all entities?

4. Of Clouds and Clocks
Human Activity Systems are akin to clocks and clouds existing in and controlled by clouds
Clouds can be subject to quantitative and qualitative analysis, but with a significant error factor and great imprecision
Clocks can be quantified and qualified, operative mechanisms identified and inner workings explained (I->M->O)
All objective phenomena exist somewhere along this continuum
Complex, Highly irregular, disorderly, and unpredictable
Highly regular, ordered, and predictable
mechanisms

5. Complexity in financial institutions
From Clouds to Clocks…Human Activity Systems
I->M->O
RegTech provides the mechanisms to address some problems

6. Bank of England holds that there is…
John Palmer
A lack of common understanding
Imprecision of definition
Language
Semantic ambiguity
Lack of business context
Lack of stakeholder perspective
Concept complexity
The illusion of commercial advantage
A requirement for a common vocabulary of business terms (Ontology), uniquely defined and grouped that is understood and mandated by all stakeholders
A need for precise definitions and rules by all
Firms
Regulators
Software vendors
Standards bodies
Requires fundamental mechanisms…ontologies
“An ontology is a formal, explicit specification of a shared conceptualization”
SemTech4RegTech provides applied mechanisms to achieve this…

7. Technologies and Standards for RegTech
RegTech Needs Standards

8. What does RegTech do?
Makes the business of complying with reporting requirements simpler
Drives efficiencies by closing the gap between the intention of regulatory requirements and the subsequent interpretation and implementation within firms
Semantic technologies, Artificial Intelligence and Machine Learning
Simplifies and assists firms in:
Governing, managing and exploiting their data
Supporting better decision-making
Suspicious activity detection
Data analytics technology, real-time compliance monitoring and trade surveillance systems.
Permits regulation and compliance processes to be delivered differently and more efficiently
Distributed ledger technologies, automated compliance systems, and biometrics for identity verification purposes
Enables machine-readable regulation
Christopher Wollard (2016) Innovation in RegTech, London FinTech Week

9. The regulators’ perspectives…
Transitioning compliance from an analogue to a digital world is an historic opportunity to transform the current regulatory model … Dr David Hardoon, Chief Data Officer, MAS
A more transparent financial services sector & open source standards for data will be critical … Nick Cook, Head of Data & information Operations, FCA
Semantic technologies provide the answer… John Palmer BoE
What questions are on the minds of regulators …
How can regulators support the new RegTech landscape?
What are the most forward-looking regulators doing?
Why do sandboxes have a critical role to play?
When will machine readable handbooks be the norm?
Will RegTech provide the next generation of tools & techniques for market supervision & policy analysis?
RegTech For Regulators?
…e.g. OCC, MAS, BoE

10. What’s on the minds of the industry?
What are the key regulatory challenges firms face and how can RegTech solve the problems with core technologies?
What are the internal hurdles around procurement cycles, legacy systems, enterprise data silos, risk and controls that need to be overcome?
How are firms going to work with new RegTech providers?
Where are the opportunities for firms to create shared services & transform the Back Office?
How can firms drive industry collaboration and innovation to make the most of the RegTech Opportunity?
How can firms support collaboration and innovation to drive the RegTech industry?
All have yet to be answered fully…

11. General areas where RegTech is targeted
RegTech for Regulatory Compliance (MiFID II, PSD2, MAR, GDPR…)
RegTech for Enterprise Risk Management
RegTech for Enterprise Data Management (from governance to analytics)
RegTech for AML
RegTech for Transaction Monitoring
RegTech for Communications Monitoring
RegTech for Managing Financial Crime
RegTech for Managing Conduct Risk
RegTech for eCommerce (esp. mobile, B2B, etc.)
RegTech for the Trading Book
RegTech in the Boardroom
RegTech in the Cloud
What Are the Risks & Liabilities for Financial Institutions?

12. A snapshot of leading RegTech Vendors and Value Segments
Risk, Compliance and Due Diligence
Fenergo
CUBE
JWG
Compendor
Alyne
360Kompany
smartKYC
IdentityMind Global
Bearing Point
Message Automation
RegTek Solutions
Truiloo
Actimise
Suade
Regulatory Reporting
Verification/Identity Checking
Transaction Reporting and Monitoring
Workflow and Process Management
Corlytics
Regulation & Compliance Gap Analysis and Management
Adapted from RegTech Supplier Performance 2017 marketfintech/regtech-report

13. Barriers and Gatekeepers for Vendors
Organisational culture, poor understanding of core technologies
Fragmented organisation governance and functional silos.
Short-term thinking
No strategic perspective
Hype issues
In-house technologists & NIH syndrome
Legacy systems
Harmonization/standards
Point solutions from SME innovating RegTech Cos
Integrated RegTech suffering as iGRC, ERM etc.
Budget affecting PoC adoption
Chief Compliance Officer
MLRO
Heads of Financial Crime
Heads of On-boarding
Chief Legal Officer
Regulatory Affairs
Regulatory Project Managers
Chief Data Officer
Chief Digital Officer
Chief Operations Officer
Heads of Trade Reporting
Operations Managers
Chief Information Officer
Business Analysts
Chief Risk Officer
Chief Finance Officer

14. Beyond the Hype…Adding Value with RegTech
Fragmented approaches…the RegTech Labyrinth
Goal should be Enterprise RegTech
An innovative mind-set is fundamental to successfully integrating RegTech into financial services firms
Separating Hype From Reality…
Which new technologies are game changers for RegTech?
Adding value…
Firms need to linking KPIs and perform risk analysis to/on RegTech solutions
Measure their effectiveness in terms of managing compliance, cutting costs, and building competitive advantage through cost and differentiation strategies

15. Any questions? 1.