The Sionic team attended the Global RegTech Summit in New York this month. Among the participating vendors, which included the usual suspects such as NICE Actimize, Global Relay and Cube, there were also a myriad of new vendors sporting exciting technologies, touting their ability to leverage recent breakthroughs in Large Language Models, No-Code Platforms, and Intelligent Process Automation (all of which have been explored in detail in our recent whitepaper), to deliver efficiency on an unprecedented level.
RegTech Analyst reports that more than $46 billion has been injected into the global RegTech sector between 2019 and the first half of 2023, asserting that the RegTech industry is one of the fastest-growing industries in the financial services sector. However, while adopting RegTechs for Financial Crime Management can yield substantial benefits in efficiency, organizations still struggle to navigate the many challenges posed by these new technologies.
Indeed, when asked about their approach to adopting RegTech, one panellist answered with one word: cautiously. A Mastercard executive mentioned that Mastercard only works with a small fraction of RegTechs, while the Deutsche Bank and Scotiabank executives said they don’t expect a wholesale migration to the Cloud in the near future. The disparity between the plethora of exciting new technologies and the organizations’ inability to implement them seems to pose the question: are RegTechs trying to sell a shiny new sports car to an audience who are yet to receive their driver’s license? It seems that established market players in the financial industry are still wary of adopting any new technology that requires them to adjust their information security strategy, upskill their internal teams, or modify their current operational model.
Chief among the concerns raised were limitations around data sharing with hosted solution providers and other institutions, a lack of clarity around high-impact use cases, and the cost associated with adopting new technologies. Overcoming these hurdles is particularly challenging for larger organizations, which are typically placed under greater regulatory scrutiny, process more information, and struggle to create cohesion within a sea of federated systems and information structures.
As a predicate to implementing breakthroughs in AI, data analysis, and information sharing, organizations should first consolidate data sources, create robust security protocols for data at rest and data at transit, and establish clear procedures for adopting new technologies for Financial Crime Management.
Bad actors continue to discover ways to leverage technology to facilitate crime. As criminals become more sophisticated, it’s vital for organizations to place a greater emphasis on leveraging technology to prevent financial crime and improve efficiency within their operations. While adapting to the new world poses many challenges, it’s becoming clear that relying on last-gen technologies to fight financial crime is no longer sustainable.
Interested to learn how technology can help improve efficiency within your organization? Reach out to discover how Sionic can help.