On the 24 June, Napier and Know Your Customer joined forces to host a webinar aimed at exploring best practices for financial institutions looking to create a more effective and efficient AML RegTech ecosystem.
The panel comprised:
- Claus Christensen – CEO at Know Your Customer
- Wendy Langridge – Chief Regulatory Officer at BCS Global Markets
- Sian Lewin – Co-founder & Head of Client Delivery at RegTech Associates
- Phil Cotter – Group Head Customer & Third Party Risk Solutions, Data & Analytics at London Stock Exchange Group
- Julian Dixon (moderator) – CEO at Napier
You can watch the replay or read our summary of the key considerations for your journey on building a robust AML RegTech ecosystem:
1. Recognise the ecosystem functions on many levels
The AML RegTech ecosystem is not just about tech. The ecosystem actually functions across many levels, combining tech, data, people and process. The three levels of ecosystem are across:
- The financial institution
- Industry
- Regulators and law enforcement
An integrated approach within and across these ecosystems is essential for achieving an effective, joined up approach to fighting financial crime.
2. Appreciate there are barriers to the adoption of RegTech
The level of RegTech adoption is not currently where it needs to be. There are
several internal and external barriers that are hindering progress and need to be overcome.
On an internal level, for example, there is a general lack of education and awareness of the variety of solutions available. That said, with more than 400 RegTech offerings available, that’s perhaps quite understandable. Long procurement cycles of 12-18 months are also causing delays to projects where time is of the essence.
Cultural alignment can be another big barrier because the adoption of RegTech can mean changes to team composition. It’s crucial to understand and manage these dynamics to be able to overcome obstacles.
3. Adopt RegTech with added value features
Those invested in AML RegTech buying decisions will quite rightly want to prioritise the ability of the system to perform its key functionalities, whether that’s monitoring transactions or screening sanctioned entities. But it’s important to remember there is more to RegTech than this. It’s crucial to consider the whole picture because while added value features may be seemingly small or irrelevant, they can make a huge difference to everyday useability.
For example, the best RegTech solutions will be geared to support all user types. A large financial institution would additionally benefit greatly from effective team management and optimised workflow. Good information security is another fundamental requirement. Features like these are all essentially deal breakers that are not related to the core product offering.
4. Optimise data management and understanding
Data is a huge challenge, not least because artificial intelligence (AI) depends on it. No organisation has data in a perfect format. There is also a lot of work to be done to improve the ecosystem of sharing data internally and externally in an environment governed by strict data privacy regulations. Ideally, we need to see more regulatory support to encourage and enable data sharing between organisations for the greater good. Data standardisation is integral to this journey.
5. Implement sensitive change management with vendor partnerships
Building a robust AML RegTech ecosystem ultimately brings change with it. Sensitive change management should therefore be a priority. It is important to be very careful when selecting your vendor and to ensure the tech you are investing in is going to meet your requirements. Even the task of understanding what your requirements are must not be underestimated; time spent getting to know them will be well spent.
Working in partnership with core suppliers and vendors will help ensure success. For example, you should keep your vendor up to date on your direction of travel as a firm, allowing them to adapt where necessary to meet your changing requirements.
In circumstances where you wish to potentially move away from an existing vendor, it is often best to do this incrementally by using a new vendor to fill a gap that your existing vendor perhaps cannot. Overtime, the services provided by the new vendor can be extended, as confidence in the relationship grows.
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