By Kevin Petrasic, Benjamin Saul and Helen Lee
Financial institutions and regulators that harness the opportunities and manage the risks of adopting regtech solutions will reap big rewards.
Regulatory compliance is timeconsuming and expensive for both financial institutions and regulators. The volume of information that parties must monitor and evaluate is enormous. The rules are often complex and difficult to understand and apply. And much of the process remains highly labor-intensive, when even the most automated solutions are often incompatible with other systems and, even today, most still depend heavily on manual inputs.
As a result, costs have risen significantly for financial institutions in recent years. According to Federal Financial Analytics, a policy analysis firm, the six largest US banks spent US$70.2 billion on compliance in 2013, twice the US$34.7 billion spent in 2007.1 In 2015, the Financial Times estimated that some of the world’s largest banks each spent an additional US$4 billion a year on compliance since the financial crisis.2