Regulatory intelligence in financial services and its potential return on investment for companies

With the current exception of cryptocurrency and crypto assets, the financial services industry is a heavily regulated one. To be able to continue to have a competitive edge firms need to innovate, develop and sell new financial products and services while also complying with, or perhaps finding opportunities in, a raft of regulations. Despite many efforts to define global regulatory standards there continues to be differences across jurisdictions and sectors including insurance, payments, banking and investment management.

With the regulatory environment constantly evolving, being compliant within today’s regulatory regime isn’t sufficient so it is important that firms future proof their activities by anticipating future regulatory changes through horizon scanning and regulatory monitoring.

WHAT IS REGULATORY INTELLIGENCE AND HOW DOES IT DIFFER OR FIT INTO REGULATORY AFFAIRS?

Larger firms have specialist people to focus on regulatory intelligence within the regulatory affairs department, whereas in smaller firms there is perhaps not the same division between regulatory affairs and regulatory intelligence.

In essence, regulatory intelligence is all the activities that gather the information from regular regulatory monitoring and turns it into actionable insights that are meaningful to the business. An example of this could be commenting on a consultancy paper or draft guidelines to influence a firm’s policy or to give strategic advice on how to build a robust submission plan. Regulatory intelligence also assists in maintaining compliance within a firm and to developing appropriate regulatory strategies.

Regulatory intelligence is driven by the needs of the firm considering its assets, its competitive position and future strategies including those concerning regulatory risk. It plays a crucial part, with regulatory affairs then applying this intelligence, these strategies and requirements.

It has been very difficult to get a single regulatory view of the multiple regulations of interest, or having impact, on a firm. In recent years the Regtech (regulatory technology) sector have developed some tools to assist the financial services sector, moving from early horizon scanning applications to risk rating monitored regulations utilizing artificial intelligence and specific industry specialised data taxonomies or classifications. These specialist solutions can connect with APIs to link to a firm’s other technologies, frequently a GRC (governance, risk management, compliance) solution, adding rigour to the process. There are also specialist themed trackers available looking at regulatory themes around crypto, payments, financial crime etc. The curation and risk rating of pertinent information saves time for regulatory intelligence personnel.

With regulatory intelligence in place there are potential cost savings in terms of identifying upcoming issues and enforcements, avoiding fines and reputational damage. There can also be new business opportunities coming out of the insights and how they can be used to impact the business.

Regulation can throw up business opportunities and regulatory intelligence is there to capture these.

If you are interested in learning more about how we are helping our clients with our regulatory intelligence and regulatory affairs solutions, please get in touch with us.