Regulation must become automated

Regulation must become automated

In a new report released by research and advisory firm Celent, the author John Dwyer says to expect financial regulation to become automated as the markets become more and more technology focused.

The report “RegTech – Not Reg Plus Tech, But Reg to the Power of Tech: FinTech Will Drive Innovation and Automation to Financial Regulation” reveals that in order for the financial industry to be more efficient, it must apply technology to regulation because of larger quantities of data being produced.

Celent says that structured and unstructured data is being produced and analysed in order to make financial decisions. This needs to be taken into consideration as fintech continues to disrupt the traditional sector and Dwyer mentions that it will disrupt regulation too.

This will make an impact on regulators in a number of ways as crowdfunding and P2P funding is coming to the forefront with a growth in data analytics fuelling the change. Alongside this, an increasing number of financial and non-traditional financial firms merge to create financial hybrids.

Automation of regulation will eliminate the problem that financial institutions face today as they have to comply with many regulations which occasionally state the same thing. If businesses adapt to technology and their strategy to fit innovation, regulations should be easy to deal with.

Dwyer says that fintech is a burgeoning industry and it makes sense to use automation. “Regulators, incumbent financial institutions, and emerging fintech companies will increasingly leverage technology to move towards real-time financial regulation in a data-rich and analytical manner. There will be shorter and more productive feedback loops between regulators and financial institutions, with a greater level of review of existing regulations to ensure that they remain relevant and effective,” says Dwyer.