Integrating Regulatory Technology (RegTech) into the digital transformation of a bank Treasury
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ORIGINAL ARTICLE
Integrating Regulatory Technology (RegTech) into the digital transformation of a bank Treasury Johan von Solms1
© Springer Nature Limited 2020
Abstract The volume and complexity of financial regulations have increased significantly since the 2008 financial crisis. This has put increasing pressure on banks to monitor and report a range of intricate exposures to comply with new prudential requirements. Regulatory Technology (RegTech) is an emerging technology trend leveraging Information Technology and Digital Innovations that can greatly assist with a bank’s regulatory management process. A consideration is that these technologies can sometimes be expensive and inefficient if deployed on an ad hoc and stand-alone basis. An option is to incorporate RegTech into the digital transformation strategy of a management function such as Treasury. Integrated adoption would mean the digital platform can be deployed to support both strategic management activities and enhanced regulatory processes within Treasury, thereby ensuring commercial and prudential objectives are aligned. RegTech can provide an invaluable tool, in a business-as-usual environment, as well as in real-life stress events, such as the recent Coronavirus outbreak. This paper explores the potential of RegTech and the merit of incorporating it into a smart Treasury department. Keywords Regulatory Technology (RegTech) · Smart Treasury · Digital technology · Innovation · Regulations and compliance · Coronavirus
Introduction The banking landscape has changed significantly over the last couple of decades and especially after the 2008 financial crisis. New regulations had an impact on many aspects of banking activity including: liquidity [1], capital management [2], profitability [3], trade finance [4], lending [5], offbalance sheet activity [6] to name but a few. Another area where there was a significant impact for many banks was in the volume and complexity of the new financial regulations and subsequent expansion of banks’ compliance requirements [7–9]. The volume of regulatory reporting has increased significantly since the global financial crisis. Many regulated firms have found that reporting has become more complex and time consuming. A large amount of reporting takes the form of firms submitting structured regulatory reports, while the number of ad hoc data requests has also grown. These
* Johan von Solms 1
University of Johannesburg, Cnr of Kingsway avenue & University road, Johannesburg, South Africa
intermittent requests can be particularly challenging and time consuming, since compliance with them can be very difficult to keep up-to-date [10]. One way to illustrate the huge growth in regulatory and compliance rules is to measure the time it would take, for example, to read the US banking centred regulations. Based on 2017 data, it was estimated that it would take over 5700 h for one individual to read all the relevant regulatory materials (at a reading speed of 300 words per minute). That is almost 3 years of reading time, wit
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