A newly released white paper by Confluence discusses the historical landscape that helped give rise to RegTech, defining the concept and evaluating its implications around the transformation of the asset management back office.
Confluence, a leading provider of data-driven management investment solutions that aimed at optimising efficiency and control, recently published its new white paper, dubbed – RegTech for Asset Managers: Unleashing the Pent-Up Demand to Automate. The report begins by highlighting a dramatic rise in reporting obligations for asset managers in recent years, which it views as the result of an overall regulatory shift toward heightened management of systemic risk. Regulatory requirements such as the EU’s Alternative Investment Fund Managers Directive (AiFMD), U.S. Money Market Fund Reform and last year’s SEC Investment Company Reporting Modernization Rule (SEC Mod) are designed to give regulators the data needed to provide in-depth visibility into systemic risk.
This increase in tegulatory pressures has led many buy-side firms to turn to a new range of solutions, collectively referred to as RegTech. In general, these solutions use advanced data analysis and AI to monitor risk, support firms in meeting regulatory compliance requirements, and to help companies to improve operational efficiencies and overall cost effectiveness.
According to Confluence, asset management firms today demonstrate a sense of urgency to transform their back offices through automation. There is a palpable feeling that this goal is no longer a nice-to-have, and instead has become a need- to-have. This sense of urgency has caused many firms to allocate more of the budget to investing in transformation projects that leverage RegTech capabilities. This has already begun to create efficiencies for the firms who have been proactive. They’ve been able to drive down costs, mitigate regulatory risk and better understand business risk.
RegTech offers asset managers a unique opportunity to review and revamp the business. Instead of just tacking on new, single-point applications to an outdated or overgrown platform, asset managers are now adopting new, more innovative ways to solve regulatory and operational challenges. Ultimately, this is the value that RegTech is able to offer today – but as Confluence asserts, this is only the tip of the iceberg.
To read or download a PDF copy of the Confluence white paper RegTech for Asset Managers: Unleashing the Pent-Up Demand to Automate, click here.