Excerpt from FinTech Global Article, Published on Oct 15, 2024.
As financial institutions rapidly adopt new technologies to streamline operations, a natural tension is emerging between innovation and regulatory compliance. This dynamic was the focus of a recent panel at the Global RegTech Summit USA, held in New York. The panel featured executives from leading financial firms, including Morgan Stanley, ICBC Standard Bank, and Principal Financial Group, who discussed how technology, while essential, often conflicts with the slow, deliberate nature of compliance processes.
The consensus was clear—technology is vital but can create friction with compliance protocols. One panelist noted that over 90% of their day is consumed by managing this tension. Technology aims for speed and efficiency, while compliance requires thoroughness and often lengthy processes, leading to potential operational bottlenecks. Even small changes, such as adjusting inactivity lock settings on office computers, can have unforeseen regulatory implications. This highlights the necessity of clear communication between compliance and tech teams to avoid such conflicts.
When it comes to implementing RegTech solutions, panelists debated whether firms should build in-house or partner with vendors. Most agreed that outsourcing is often the more practical choice, especially given the complexity and upkeep involved with technologies like AI. However, some noted that for firms with intricate systems, in-house development may be more effective, as customizing vendor solutions can be difficult.
Looking ahead to 2025, panelists emphasized the growing reliance on AI for managing regulatory changes but warned of the risks involved. Ensuring that AI accurately interprets regulations and addresses privacy concerns will be crucial. The potential rise of the NIST Framework as a global standard for AI governance could offer guidance, especially as firms navigate stricter regulations, including the EU’s AI Act.
To delve deeper into this topic, please read the full article on FinTech Global.
