Results tagged “regulation”

Regtechs - The Bank Friendly Fintechs

"Regulation needs to catch up with innovation" - Henry Paulson, Banker, 74th Secretary of Treasury - US.

Traditionally, banks have relied on policy, procedure and people to comply with regulations, rather than on technology - most repeatable compliance processes are mostly handled manually.

It is a known fact that regulatory pressure on banks has been increasing since 2008. BCG reports that the number of regulations that a bank has to track on a daily basis has increased from approximately 60 in 2011 to a whopping 200 in 2015. Strategic response of banks has been to handle the increasing regulatory pressure via process and people, hiring more staff for compliance. At one point, Citibank was reported to have 30,000 employees working on regulatory compliance. Despite this, European and North American Banks have collectively paid USD 321 billion in compliance fees in the period from 2008 to 2016. With increasing regulatory pressures, high costs of litigation and compliance fees, shrinking margins and shortage of compliance experts, banks are now looking at fine tuning this process in order to ensure compliance and avoid costly fees, as well as, keep running costs low.

Functionality versus Process versus UI versus Regulation

The core banking solution was designed initially to centralize accounting in banks and enable their customers to transact from any of the branches or channels connected to the central database. Functionality and processes were built into the core banking solution, based on the software's country of origin. The primary design was based on the knowledge of local banking/domain experts in the product company. Though the solution catered to most banking needs of a particular country or region, in certain markets, it faced fitment challenges both on functionality and process compliance. Variations in the account opening, customer creation or loan approval process in different markets often required subtle or even major changes in the software solution. Customization was required to achieve process automation to meet market requirements.