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ING and Commonwealth Bank of Australia (CBA) have successfully completed a RegTech pilot to simplify processing of information and implementation of regulation using the Markets in Financial Instruments Directive II (MiFID II) as a test case.

The Financial Conduct Authority (FCA) was a key member of this experiment and participated as an observer of the project. The FCA understands the benefits of collaboration in areas where an industry solution is beneficial for the overall system, such as compliance. Observing the project gave the FCA greater understanding of the potential applications of RegTech, Natural Language Processing (NLP) and Artificial Intelligence (AI), and how these technologies can help organisations simplify and meet their compliance obligations.

The project, completed in partnership with fintech firm Ascent RegTech and law firm Pinsent Masons, used NLP and AI to interpret and convert 1.5 million paragraphs of regulation into a series of bitesize, actionable tasks appropriate for the banks.

Using Ascent’s intelligent technology, the banks were able to quickly identify items in the regulation that could be reviewed and actioned, saving hundreds of hours of manual processing.

Ian Hollowbread, Director, Enterprise Office, ING UK said, “We are proud to have taken part in this state-of-the-art pilot that brings major industry players, regulators and new technologies together, to explore solutions to challenges we all face today. This pilot has brought into focus a number of barriers to RegTech adoption, but also see its massive potential. Only by uniting the industry, RegTech and regulators, can we begin to bridge the gap between technological potential and the cost of becoming regulatory compliant.”

Supun King-JayawardanaHead of London Innovation Lab, Commonwealth Bank of Australia (CBA), said, “This pilot provides all participants the opportunity to test some of the latest applications against complex industry regulation. When RegTech meets financial services, we create opportunities for banks, start-ups and regulators to collaborate and solve industry-wide challenges. By working together, we can share best practice in due diligence, experimentation costs, business knowledge and resources — ultimately driving great outcomes for all parties.”

Brian Clark, CEO & Co-Founder at Ascent Technologies Inc, said, “This pilot demonstrates the power of RegTech, and we’re pleased that our solutions proved effective at automating and enhancing MiFID II compliance processes. Ascent uses NLP and AI to help transform complex regulatory data into actionable knowledge. By automating their compliance processes with Ascent’s first-of-its-kind technology, users can save significant time and money while reducing their regulatory risk. We were proud to work with ING, CBA, FCA and Pinsent Masons on this project and look forward to continued collaboration.”

Luke Scanlon, Head of Fintech Propositions, at Pinsent Masons, said, “We see great potential for RegTech solutions to assist regulated businesses in making their approach to remediation more efficient and effective over the long-term. From a legal adviser’s perspective, it means that more time and resource can be spent on helping clients develop regulatory strategy and understand the impact of, and opportunities to be gained from, regulation on their businesses.”