(5 min read)
With the right vetting process, it is absolutely possible for you to have confidence in the technological tools you choose to adopt
You’ve just been shown a RegTech demo and the technology is something right out of your dreams. It can save you thousands of man hours, significant amounts of money, and reduce your regulatory risk in the process. There’s no doubt it sounds amazing, you think. But can it actually do all of the things promised?
This is not an uncommon question, representative of the trust gap that currently exists between RegTech companies and the financial institutions they serve. This trust gap is certainly understandable — RegTech offers new technology and skepticism is natural whenever that’s the case.
Even more importantly, with something as complex and vital as regulatory compliance, financial firms need to be skeptical as they evaluate possible solutions. Consequences for any technological shortcomings can be catastrophic. Why would Compliance and Risk teams take a gamble on something that seems too good to be true?
Because, for one, the opportunities new RegTech ventures present are real and powerful. And for two, because the alternative — not adopting technological solutions — is far worse.
If the trends of the last decade continue, the regulatory “tax” firms are forced to pay is only going to increase, and the fines for non-compliance will only grow too. That means firms will have to hire more people to take on more work that could have more costly mistakes. Financial institutions will be forced to adopt new technologies as they offer the only viable path forward.
But Compliance and Risk teams don’t need to feel stuck between a rock and a hard place.
With the right vetting process, it is absolutely possible for you to have confidence in the technological tools you choose and to be excited about adopting them. Here are a few strategies we suggest.
1) Educate Stakeholders about the Technology
New technology can often seem like a black box. If you don’t know what’s happening inside that box, it can be difficult to trust that it’s doing what it’s supposed to. But by learning more about how that technology works you can begin to understand it, better evaluate it, and (if it’s the right fit) begin to trust it.
RegTech companies can and should help with this education. At Ascent, for example, our technology helps customers automate regulatory compliance. We do this through our proprietary RegulationAI™ — a “digital brain” that processes and analyzes regulatory text in order to deliver to our customers the regulatory obligations and rule changes that are most relevant to them.
To help this digital brain not seem like a black box, we educate our customers on how it works. It’s powered by two primary forms of technology: natural language processing (NLP), which helps computers understand human language, and machine learning (ML), which is all about creating models that are designed to learn on their own.
Once our customers understand how these systems operate together — how, specifically, we use NLP to rapidly analyze millions of lines of regulatory text, which we then feed into our ML models to teach them how to “read” the regulations — they understand how RegulationAI™ is able to deliver up a dynamic obligations register specific to them.
Instead of seeing our technology as a black box, financial institutions can evaluate whether it’s right for them, and our customers can have confidence when using it.
2) Pilot a Solution First
A pilot can be a great way to let you dip a toe into new technological waters before taking the deep dive. For day-to-day users, a pilot lets them understand from a hands-on level how the solution will fold into their processes. And for decision-makers it lets them see real results before making a full commitment.
To run a low-stress, high-outcome pilot, we suggest the following three strategies:
- Clearly defining the goals of the pilot, so you can accurately determine whether they are met or not;
- Making sure both decision-makers and day-to-day users are on the same page about how the pilot will work and what to expect from it;
- Obtaining useful feedback in a systematic way — both throughout the pilot and once it’s been completed.
At Ascent, we offer our customers the opportunity to test drive our solutions with a low-cost, low-risk pilot. Our Customer Success team is fully engaged throughout, making onboarding as simple as possible for your team while still ensuring you gain a clear understanding of all the ways Ascent can help you achieve your goals.
3) Collaborate with Other Parties
Here at Ascent, we are big believers in collaboration. We think that a developing space like RegTech will only be empowered by interaction and collaboration between all the parties involved. And we believe collaboration can be key in helping financial institutions gain confidence in different RegTech solutions.
Here are a few ways collaboration can help build trust:
- Financial institutions can reach out to other institutions that are already using new RegTech solutions to help understand how the technology has been beneficial and learn about any potential pain points.
- Financial institutions can work with consultancies to help evaluate new solutions and implement them efficiently and effectively.
- RegTech companies can work with financial institutions to make sure their solutions truly meet the needs of those institutions and to provide educational materials to help institutions develop confidence in new technologies.
In fact, regulators themselves are getting in on collaboration too, as evidenced by groups like the Global Financial Innovation Network (GFIN), an international collection of 35 organizations which serves as a network for regulators to knowledge-share and collaborate on bringing RegTech innovations to bear.
As always, whenever regulators themselves adopt a practice, it’s a good sign that the rest of the market will likely follow suit soon.
Bridge the Gap with Ascent
At Ascent, our AI-powered solutions help you manage regulatory change with confidence, so you can focus on the high-value activities that matter most, without the constant worry of accidentally missing an important update or keeping records that stand up to regulatory scrutiny.
You don’t have to drown in regulation, and you don’t have to cling to a life raft you don’t have faith in. Find the solution that’s right for you.
LEARN MORE: Click here to learn about Ascent Solutions
Modern challenges require modern tools. Interested in seeing how Ascent can help you automate horizon scanning, change management, and obligations management?