In the last RegTech 20:20 podcast episode of the year, the CEO and co-founder of Encompass Corporation, Wayne Johnson, Global Head of Client Lifecycle Management and KYC at PEGA, Alex Dixon, and financial services industry expert Jo Scanlan discuss how RegTech, digital transformation and Client Lifecycle Management (CLM) have developed in the last year, whilst also looking towards 2021.
In review of 2020, Wayne commented: “[COVID-19] has helped [RegTech] mature a lot over the last 12 months…”
“[Over 2020] our customers have been under more pressure – margins are tightening, and the need for businesses to transform their offering into a much tighter digital service is much greater now than it ever was, prompting demand for RegTech and automation software.
“Furthermore, as the regulatory environment hasn’t suffered any relaxation by the regulators, we’re still seeing that the pressures on those in the compliance groups in organisations to ensure that they are doing the job has increased, prompting the question: how do we tighten margins and deliver a better outcome…? So that has played a big part in the growth of RegTech as a sector, and the particular focus it’s taken in the mind of those companies that are trying to improve their focus, cut their costs and deliver a better outcome.”
When considering the importance of digital transformation initiatives for financial institutions, Alex said: “Digital transformation to global banks has become essential. 18 months ago I would have said it was something that was important to banks, but they’re going to proceed at a slow and measured pace, in order to get there. But, with the onset of Covid and having to work remotely, everyone has had to accelerate their digital plans, and they not only have to accelerate.
“With remote working, banks have to have this digital transformation as they still have the regulatory obligation to go back to the regulators and show that they’re still in control of their client and their lending money to clients that have had all the compliance tests.”
And, discussing the growing importance of CLM, particularly to financial institutions, Jo said: “[Throughout 2020] CLM’s have helped to coordinate end to end onboarding and the KYC workflow, the ability to have sophisticated rules engines that cover the regulatory requirements around multiple regulations. Also, having that API connectivity to be able to connect that information into other platforms and allow automation [will continue to be key].”
Some other trends and predictions in the episode include:
- Increased dependency on automation
- The need for higher levels of data entry, to displace physical paperwork, and subsequently the role of for RegTech in ensuring this process is managed legitimately and safely
- The emergence in acquisition activity occurring in the financial and RegTech sectors, as we see the natural amalgamation of some of the smaller players into larger enterprises – a natural process which, on the whole, has been placed on pause since the start of the pandemic, and is expected to resume towards the end of 2021