The financial world is shaking on its foundations. In recent years, prominent financial institutions have been fined considerable fines for not having their processes and procedures in order. The processes must be put in demand due to a large number of fraud and money laundering cases. As much as 2 to 5% of global GDP can be labeled as money laundering, increasing the regulatory burden on banks. Unfortunately, innocent customers bear the brunt of this, as increasing controls and rising costs make life difficult for users.

Regulatory technology

Control processes and costs are skyrocketing. Compliance involves a lot of monotonous work for many person-hours, leaving employees burdened with repetitive tasks. This cycle of dissatisfaction, increasing laws and regulations, and high costs must be broken. Regulatory technology comes in.

Regulatory technology, Regtech for short, is the solution to complex compliance issues in Finance. A vast array of technologies helps financial services companies, such as service providers in the world of mortgages, insurance, banking, and finance, to always comply with the most up-to-date laws, regulations, and ethical requirements. As a result, Regtech is an easy way to cut costs, reduce crime rates dramatically and provide meaningful work for employees.

Open Finance on the rise

Developments in the financial world do not stand still, and with developments around Open Finance, efficient and secure processes are becoming increasingly important. For example, getting to know your customer may be more accessible, but this involves a massive load of customer data, all of which must be processed according to the rules. So how do you make clever use of the endless possibilities of Open Finance without losing sight of legal requirements? First, we must consider how organizations transition from Big data to Good data. Adriaan Hoogduijn, CEO of Hyarchis, adds, “Financial service providers should not only align their onboarding with the principles of Good Data but also have a future-proof framework to manage the information they hold flexibly.”

According to Emanuel van Praag, professor of Financial Technology and Law at Erasmus University and an attorney at Kennedy Van der Laan, financial data sharing has three pillars: data portability, machine readability, and reuse of datasets. He emphasizes the benefits of an open financial system: “What if the advisor could look deeper into the consumer’s payment behavior and see that they regularly go to the casino? Then suddenly, a higher mortgage is not such a good idea, even though the standards would allow it as normal.”

Still, it is not all rosy, as privacy concerns must be taken into account: “There has to be a good reason you are sharing data … Is privacy becoming something for the rich? Companies pay people for their data. If you’re rich, you can decide you don’t need that money.”

Hyarchis Connect 2022

During Hyarchis Connect 2022, Emanuel van Praag and Adriaan Hoogduijn will speak and be part of the panel discussion, discussing the balance between Regulatory Technology and Open Finance. The webinar will take place on Oct. 11, starting at 12:30 p.m.