If you work in risk, you’re likely getting daily phone calls from regulatory technology (regtech) companies.
One vendor has a new product that streamlines your risk analysis; another is trying to sell you algorithm-created compliance reports. If it’s not a call, it’s an email, and hey, why not add another one to the pile?
Regtech is a breakthrough for banks, institutions that are mired in countless rules and regulations from a number of federal agencies. It cuts costs, expedites processes and simplifies workflows.
But with constant pitches from regtech companies, how do you know which product to go with? And, is it necessary for your bank to jump on the artificial intelligence bandwagon or are your current processes already doing the trick?
Ultimately, you have three options: You can choose to upgrade your regtechsystems with this new, up-and-coming technology or stick with your current processes or develop a new product in-house. So, what’s your best bet? Here’s what to consider.
Looking to Upgrade? Do Your Homework First
Regtech can do wonders when it comes to checking off your regulatory boxes. If you’re looking to upgrade to a new regtech product, there’s a lot to gain, but also a few things to consider, too.
“Regtech can do wonders when it comes to checking off your regulatory boxes. If you’re looking to upgrade to a new regtech product, there’s a lot to gain, but also a few things to consider, too”
For one, fresh startupsin any industry inevitably carry a certain amount of risk. So be sure to do your research on prospective vendors. You’ll want to make sure new regtechs have established a reputation of success, while also understanding what their long-term goals are.
Regtech startups might be hoping for a larger company to acquire them. If that’s the case, an acquisition could change the product. New companies shouldn’t operate under a black box model either. A vendor’s processes should be transparent and easy to understand.
Stick to the Old If You’re Happy with Current Processes
But maybe you’re already satisfied with your regulatory technology.And in that case, more power to you.
Sticking to the old has a couple of benefits, including the fact that you already have a proven process with your current system. If it’s not broken, there’s no need to fix it.
Forgoing a new vendor will also save time and allow your team to continue forging ahead on projects that need to get finished. Not to mention it won’t add any expense to your budget.
Sometimes the new, sexy innovation just isn’t necessary.
Develop Your Own Product If You Have the Resources
Creating your own regtech product is an attractive option for banks with the necessary resources. When you create your own technology, you’re able to fine-tune it to fit your exact business needs. And since you’re the expert when it comes to your internal processes and systems, you’ll likely create something more user-friendly than an outside vendor would.
In-house development will probably be cheaper, too.
The deciding factor on whether or not to build your own product is the efficiency and knowledge of your technology department. Teams without experience building proprietary technology will struggle to develop a regtech product.
No matter which route you take, establishing regulatory processes to remain in compliance is imperative. Regtech is just one way to monitor your systems. However, it’s likely to become more and more commonplace as technology continues to advance.
The phone calls from regtech companies probably won’t stop anytime soon. But taking a strategic approach to regulatory monitoring may thwart some of the anxiety that comes with the industry’s multitude of choices.