Pegasystems flag up RegTech dead end risks at Sibos 2016  

Promising to slash onboarding times and streamline KYC processes, RegTech seems to be a silver bullet for banks wanting solutions paced for change. But the industry is risking driving itself into a dead end street of siloed RegTech KYC apps, argued Reetu Khosla, a senior director at Pegasystems, at Sibos 2016.

“Smart but fragmented apps are no solution at all when banks need systems that remedy complex regulatory requirements across lines of business, booking entities, geographies, products, and customer types. We need to be learning from the best early use cases of RegTech today and Sibos maybe the ideal forum to shake out good from bad RegTech practice,” she said. “Top banks are using RegTech to rapidly respond to audit and regulatory findings with capabilities including automated bulk case creation, routing, and escalation, as well as auditability of rule changes. Having the ability to quickly update rules and rapidly address new findings reduces the amount of manual labor involved as well as risk. The key is to ensure the applications selected do not create more siloes. RegTech is going to fail unless it is part of a larger digital transformation strategy.”

Meanwhile, on the globalisation of regulatory pressures, she added: “There is a real watershed in how much more national regulators are coordinating with other national regulations. What is striking is how this is creating uniformly strong and globalised wave of pressures to do in depth examinations in nearly every part of the globe. While previously the scrutiny was on US and UK bankers, the requirement to do look-back examinations over millions and millions of account holders across multiple, if not all jurisdictions, is hitting the sector strongly. A consequence of this has to be a leap forward in how much more these investigations utilise automated and even autonomous systems.”

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