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“There aren’t many conferences in the industry where all players in the ecosystem are present,” Chief Operations and Technology Officer at Bank of America, Cathy Bessant, said during the closing keynote at RegTech Enable in Washington, DC - giving nod to the public and private sector leaders in attendance at the inaugural conference.

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More than 30 top financial, regulatory, and investment experts talked tech, complex regulation, automation, and enabling compliance management with technology solutions at RegTech Enable with speakers including Senators Mark Warner (D-VA) and Bob Corker (R-TN); former Minnesota Governor Tim Pawlenty; banking heavyweights Seth Wheeler from JPMorgan Chase and Kaushalya Somasundaram of HSBC - to name a few. Partners from Oliver Wyman, Buckley Sandler, and White and Case - top legal firms in the regulatory space - offered guidance on navigating challenges to both human powered compliance and machine-learning strategies.  

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As the leading architect of the conference Andrew L. Sandler, Chairman and CEO of Temerity Capital Partners, Asurity CEO, and a 25+ year industry veteran put it, we are on the ground floor “for making a real impact on the future of RegTech.”

#1. Moving Bigger Banks Faster

As in natural selection, it’s not the biggest or strongest company that wins, said Nigel Morris, Managing Partner at QED Investors on the RegTech stage, it’s the most adaptable.

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The same applies to the financial industry sector. And while mammoth banks move slowly to adapt, some are shifting into technology development to keep up secure borders, improve customer access, and manage government regulations.

Tech development is an ever-evolving, organic product that requires testing, breaking, refinement, and constant improvement. Banks’ knee-jerk but understandable need for industrial strength solutions to avoid crises down the line doesn’t leave much room for technology’s fail-fast approach. Implementing tried-and-true technologies can mean they are already outdated, leaving financial institutions vulnerable to new and improved security risks. The key: tools built by experts with the banking expertise and technical know-how to solve complex regulatory equations.

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#2. AI is only one half of the solution

From detecting financial crime patterns to automating monotonous manual processes, AI has a guaranteed future in the financial services industry. People checking people can result in mistakes, and the rule-driven AI companion can dramatically optimize oversight.

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Unburdening staff from repetitive, simple tasks frees them to offer more value in other areas. Where AI can increase efficiencies, however, people will still be necessary as judge and jury. The law is not always black and white and requires the necessary expertise to determine a resolution in relationship to the context.

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#3. Regulation can be a two-way street

Compliance management is not cheap from both proactive and responsive management perspectives.

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Bank of America spent $4 billion on new development and technical compliance.

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While building better compliance solutions and processes is quite an investment for most financial lending institutions, regulators don’t just want to dictate, they want to converse. 

“This is a dual value proposition,” said Daniel Gorfine, Director of LabCFTC and Chief Innovation Officer at the U.S. Commodity Futures Trading Commission on a RegTech Enable panel. “We invite you to come in and get feedback from regulators, and on the flipside it gives regulators the opportunity to learn what is really happening in the market.”

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“We are very interested in learning about the technology and tools that are out there,” said Beth Knickerbocker, Chief Innovation Officer at the Office of the Comptroller of the Currency (OCC). “If technology can help us be more efficient and effective, we are open to that.”

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By fostering a symbiotic relationship with regulators, the financial lending sector can help inform efficient, fast, and ultimately cheaper compliance management products to help mitigate and implement fair lending practices.

#4. The answers are in the data

The growth of RegTech is not just in response to the industry’s need to cut costs on compliance. It is also an opportunity to remove complexity, increase transparency, and predict failure before it happens. How? By harnessing big data.

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“We have troves of data in fraud and crisis management; we don’t make use of all the data we have already,” says Adam Shapiro, Global Chief Control Officer, Banco Bilbao Vizcaya Argentaria (BBVA).

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“We have all the pieces,” said Seth Wheeler of JPMorgan Chase, “but the pace of change in big data isn’t quick enough.” Banks must acknowledge that they are first a financial services company, and not a technology one, and then assess which partnerships with innovators can fill in those gaps.

"It's more risky for banks to try to create their own technology,” said Gene Ludwig, CEO of Promontory Financial Group. “Focus on what you do best and buy the rest."

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By working together and leveraging collective knowledge, companies can grow bigger, faster, and smarter and perhaps even help lead to a more efficient, streamlined government. 


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