With the barrage of regulation facing the funds industry, ‘RegTech’ could help firms more efficiently handle the regulatory burden and result in greater profits, the FundForum International conference heard.
A panel discussed the use of ‘RegTech’ (regulation technology – a subset of fintech) as a tool for growing and protecting assets under management.
Catherine Doherty, chief executive officer of asset management consultancy Investit, moderated the panel and said the industry was sometimes split on how to react to new regulations.
For instance, the extension to the introduction of the Markets in Financial Instruments Directive II (MifID II), caused some to think “great, let’s take this year to solve this properly”, said Doherty, while others may delay for another year.
“Firms are spending a lot on compliance but not seeing it as a potential benefit, just another burden,” she said, adding that some of the requirements of regulation – such as suitability of products and ‘know your client’ rules – could be used to great benefit.
With some firms embracing RegTech to help with regulatory implementation and ongoing compliance, and others not, Doherty said this would create “winners and losers” in the industry. While she expressed sympathy for firms at the sharp end of regulation due to regulators sometimes making onerous demands on implication dates, firms that embrace changes will succeed in growing assets.
“Build it well and you get the assets,” said Doherty, adding that those firms with the highest levels of transparency will likely win clients’ trust.
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