Regtech has seen significant collaboration recently. Commonwealth Bank Australia (CBA) has completed a regtech pilot with ING to simplify information processing and regulatory compliance.
The Financial Conduct Authority (FCA) participated as the observer in this pilot project, which used the Markets in Financial Instruments Directive II (MiFID II) as a test case.
The project, completed in partnership with regtech provider Ascent Technologies, used natural language processing (NLP) and artificial intelligence (AI) to interpret and convert 1.5 million paragraphs from the directive into a series of bitesize, actionable tasks appropriate for banks.
By using AI technology, the banks were able to quickly identify items in the regulation that could be reviewed and actioned, thereby eliminating the need for manual processing.
The successful completion of the project is also expected to provide the FCA with greater understanding of how regtech, NLP, and AI can help organizations to simplify their compliance obligations.
This pilot provides all participants with the opportunity to test some of the latest applications against complex industry regulation. Only by collaborating with the industry can regtech players and regulators begin to bridge the gap between technological potential and the cost of becoming regulation-compliant.
With financial regulation continuously evolving, banks and financial institutions are under constant pressure to keep up with the latest rules. Regulatory technology will address this problem.
Many banks these days are eyeing their bottom lines while seeking to boost their compliance efforts. The partnership between CBA and ING demonstrates one strategy within regtech where banks are seeking to adopt existing technologies rather than build them in-house.