Skip to main content

(5 min read)

For any given trade, asset managers risk higher non-compliance fines for the regulations they know about, and also risk not knowing about all of the regulations that may apply.

The bombshell that was the Global Financial Crisis of 2007-2008 radically remade the financial services landscape. It brought the global economy to its knees, set the stage for the longest bull market on record, and ushered in a new era of regulatory oversight.

And it is perhaps this last point which could have the most lasting effect. Because while the global economy has mostly recovered, and while at some point even this bull market will meet its bear, the new burden of regulatory oversight has transformed almost all sectors of financial services.

Asset management has certainly not been immune. Those managers looking to simply raise capital, bring in clients, and put up strong risk-adjusted returns are instead shouldering an increasingly complex regulatory burden.

A few facts can illustrate the deep strain of this weight: Every seven minutes a new regulatory update goes into effect. Also: Last year, the SEC published more than 2,750 enforcement actions, including 95 against public companies — the highest number in a decade

In short, for any given trade, asset managers risk higher non-compliance fines for the regulations they know about, and also risk not knowing about all of the regulations that may apply. 

But while the challenges of increased regulatory complexity may seem intractable and insurmountable, a nascent industry is determined to provide solutions to exactly these issues — the regulatory technology industry, or, RegTech.

In this article we’ll dive into what RegTech is and examine how its solutions can help asset managers escape from under the increasingly heavy weight of regulatory compliance.

What is RegTech?

In its simplest definition, RegTech is the application of technology to improve the way we manage regulatory compliance. RegTech companies are employing machine learning (ML), natural language processing (NLP), blockchain, AI, and other technologies, in an attempt to streamline compliance processes, increase efficiencies, and lower costs and risks.

Initially, many RegTech providers focused on solutions relevant to retail and institutional banks, especially around anti-money laundering and fraud protection. But the technologies of RegTech have advanced enough in recent years — particularly as relates to ML, NLP, and AI — that automation can now meaningfully streamline the work of Compliance teams. For asset managers, the timing of this couldn’t be better, as new regulation rollouts like MiFID II and GDPR only further raise the stakes for trade and transaction reporting.

READ MORE: What is RegTech and Why Does it Matter?


Revolutionizing How Asset Managers Handle Compliance

As RegTech has blossomed over the last handful of years, a plethora of solutions have popped up to help with solving problems across the regulatory compliance landscape.

Some of these operate more like point solutions, solving one particular problem for asset managers. For example, one massive lift facing many asset management Compliance teams is the production of hundreds of disclosures that firms are required to produce throughout the year. RegTech solutions now exist that employ robotic process automation (RPA) to turn this laborious, manual process into an automated one.

Similarly, RegTech can help streamline investor onboarding, reducing the process down to minutes and making it fully digitized. And NLP can be applied to the onerous task of communications management, digitizing vast troves of telephone conversations so they can then be mined via machine learning in order to catch potential red flags.

But the truly revolutionary power of RegTech lies beyond these point solutions. In its most impactful form, RegTech offers ways to leverage the big data of regulatory compliance in order to significantly streamline labor intensive processes, such as determining which obligations apply to your business.

For example, imagine if every time another seven minutes ticked by and one of those new regulatory updates was introduced, you were able to know nearly instantaneously whether it applied to your business and how it might impact your policies and procedures. Imagine if you were able to approach a massive new regulation like GDPR and — rather than feeling that it would take hundreds of hours and a meaningful chunk of your bottom line to untangle what it meant for your company — you were able to see a complete list of your obligations in mere minutes.

This is the power of Ascent’s RegulationAI™, a true innovation in RegTech. Our technology leverages machine learning and natural language processing to automate the most tedious and error-prone parts of compliance. 

Based on your firm’s unique profile, Ascent automatically delivers the obligations and rule changes that are relevant to your business, cutting out significant white noise so that you can focus on a much narrower set of obligations. 

Ascent is faster and more comprehensive than humans alone, saving Risk and Compliance Officers hundreds of hours of manually researching, reading, and analyzing regulation so that they can instead focus on the more critical tasks.

READ ARTICLE: “But Does RegTech Actually Work?” 3 Ways Financial Firms and RegTechs Can Bridge the Trust Gap


Reduce the Weight of Your Regulatory Burden with Ascent.

In a world where the trend toward passive management has pushed fees ever downwards, asset managers have to operate as efficiently and effectively as possible. Leveraging RegTech solutions can help reign in the skyrocketing costs of compliance, meaningfully reduce the time Compliance teams are spending on laborious, manual tasks, and protect against the risks of human error in the process.

LEARN MORE: Click here to learn about Ascent Solutions