Navigating the laws and regulations that impact FinTech services is a complicated, risky job. The regulations that impact FinTech are constantly changing, and enforcement patterns are even more difficult to predict.
FinTechs are in a uniquely risky position, surrounded on one side by heavily regulated traditional banks and financial services companies and on the other by a Wild West collection of fast-growing startups, pollution launderers, and outright scams.
There is, however, one easy way FinTechs can separate themselves from riskier competitors, building up trust with both consumers and regulators, and that is to modernize their compliance programs, using tools like AI, ML, and automation to keep abreast of the regulatory environment.
Here are four ways FinTechs can take advantage of AI-powered RegTech to gain a competitive advantage in a Wild West market:
1. Mitigating compliance risks by automating manual, error-prone tasks
In FinTech, compliance professionals have the nearly impossible job of identifying relevant regulatory changes, detecting enforcement patterns, and understanding how both impact the business. Using traditional tools and processes, this is a labor-intensive, error-prone task that is full of risk. No compliance officer, or even a team, is able to digest and analyze all of the changes in the regulatory landscape in real time, which means that non-compliance is always a looming risk if steps aren’t taken to deal with the pace and volume of change.
After all, what was legal yesterday could be illegal tomorrow.
By adopting modern RegTech tools, FinTech businesses can hand labor-intensive, error-prone tasks off to SaaS providers. Those providers’ sole focus is regulatory change management. The cutting-edge AI engines and ML models that power modern RegTech tools are capable of adapting over time, learning which regulations impact your business and which don’t, meaning that obscure changes won’t slip through the cracks and only relevant changes will be passed on to business leaders.
2. Expanding compliance throughout your organization
One of the difficulties of maintaining compliance in the modern regulatory landscape is that important pieces of data may be scattered throughout the organization, but compliance practices and processes tend to be limited to compliance, legal, and security teams.
Legacy change and risk management tools create data silos that impede collaboration and modernization. Shifting to modern change and risk management tools, which are delivered as SaaS, enables streamlined workflows and unlocks data sharing, facilitating collaboration among various departments.
Powered by AI and ML, modern RegTech tools can be used to automate how data is gathered, maintained, and shared throughout the organization. Modern RegTech is designed to break down legacy silos, so compliance can be embedded into your decision-making processes.
3. Building trust through workflows and processes. . . which regulators value
Regulators emphasize workflows and processes. An organization that has the right tools in place – tools that drive repeatable, predictable workflows and processes – will be looked upon more favorably by regulators when something, such as a data breach, goes wrong.
With the right tools in place, mitigating noncompliance risks means building upon an already solid foundation, rather than ripping and replacing outdated tools and starting from scratch.
Modern RegTech tools not only break down data silos, but with silos eliminated, workflows can be designed that apply across the organization. Thus, maintaining compliance can become a core part of the decision-making process for all of your knowledge workers.
4. Accelerating time to market for new products and services
Bringing new financial products and services to market is full of risk, especially in heavily regulated industries. The regulations impacting financial products and services, such as AML and crypto ones, are in a state of flux, with laws and regulations varying greatly from jurisdiction to jurisdiction.
For many financial services companies, this translates into a very cautious and slow process for bringing new products and services to market.
Modern RegTech tools can help not only limit risks during product development, but also speed time to market, since you’ll have an accurate understanding of the regulatory landscape ahead of launch. RegTech tools facilitate data sharing, streamlined workflows, and compliance-first processes that can be trusted to deliver insights on how new products will be viewed by regulators and how the market has been evolving over time.
Compliance.ai is the only RegTech service that uses AI, ML, and automation to free compliance officers from labor intensive tasks. Compliance.ai mitigates the risk of non-compliance by automatically monitoring the regulatory environment for updates, organizing and interpreting regulatory content, ensuring change tasks are completed, and providing real-time insight on compliance status.
Compliance.ai applies purpose-built ML models to automatically monitor the regulatory environment for relevant changes and map them to your internal policies, procedures, and controls. When monitoring regulatory updates from all sources, the platform’s software filters out content so that you receive only the information relevant to your organization. Then, you can track, react, and report on impactful regulations and requirements on a timely basis.
Don’t wait until the high cost of non-compliance – fines, bad PR, and even shut-down notices – hits your business. To start to regain control over your complicated compliance processes, take the first step by investigating how Compliance.ai will automate and streamline key compliance processes, enabling you to mitigate risks, reduce costs, and increase confidence in your organization’s compliance status.
