What is RegTech?
RegTech is the emerging market, most notably for financial services companies, for software that automates both the production and consumption of reported data for regulatory reporting and compliance purposes.
If you find this high-level definition a bit abstract, then you would be hard pressed to gain clarity from SEC Commissioner Michael Piwowar’s recent speech.
Ttitled “Remarks at the 2018 RegTech Data Summit – Old Fields, New Corn: Innovation in Technology and Law,” the text opens with a quote from a Chaucer that provides a basis for a philosophical discussion of the application of technology to improve regulatory compliance. It’s a bit of a dense read.
If you muscle through the first two-thirds of the speech, however, you would be rewarded with an onpoint, concise discussion of RegTech:
RegTech also refers to the use of technology by regulated entities to streamline their compliance efforts and reduce legal and regulatory costs…Most importantly, the term covers collaboration between private and public actors to take advantage of existing technologies to make everyone’s lives easier.
This last premise – that RegTech has the potential “to make everyone’s lives easier” – is particularly notable. To what extent can one product or solution simultaneously make reporting processes more efficient (for industry) and improve the quality of reports (for regulators)?
Insurtech and RegTech – Not an Either/Or Distinction
Gain Compliance is taking on the challenges of regulatory reporting for insurers in a way that conforms with the promise of improving outcomes for both producers and consumers of data – in the vernacular of our industry, this combination would be described as ”Insurtech meets RegTech”.
For insurance carriers, the reporting burdens are considerable, and a solution that streamlines processes and creates efficiency is valuable to industry. And, just as importantly, this same RegTech solution can also improve the consistency and quality of filed data – a win for regulators.
RegTech in Action
On this last point: Gain Compliance recently completed an analysis a one section of Statutory Financial Reporting documents to examine the prevalence of errors along two different dimensions (compliance with rules, and consistency of data filed within the filing). The results of this white paper demonstrate the opportunity for a win-win solution for both industry and regulator from a thoughtful application of RegTech.