How regtech will digitally transform asset management in 2019

By Kevin O’Neill, Fenergo

24 January 2019

As the world becomes increasingly digital, start-ups specializing in blockchain and fintech are transforming businesses across the board. Yet with constantly changing regulation and the need to compete with digital disruption, 2019 will be the year when regtech rises to the top of the agenda for the c-suite in financial institutions.

Regtech in the asset management (AM)/transfer agency/asset servicing (TAs) sphere has the potential to seamlessly improve customer experience (CX), time to revenue, and the end-to-end onboarding process for investors, funds and distributors. This lets AMs focus on what they are good at – raising new capital, retaining existing clients and delivering strong risk adjusted returns for their investors.

Although regtech adoption is still emerging, global organizations are eyeing the technology. According to Juniper Research, it is estimated that global regtech spending will increase to $115bn in 2023, up from just $18bn in 2018. This aligns with a recent Fenergo global study that highlights a total of over $26bn in AML, KYC and sanctions fines issued over the last ten years.

While the benefits of regtech such as lower costs and reduced strain on resources are obvious, institutions are often more concerned with the legal implications of a compliance breach. Given the constant flux of new, updated, and often contradictory regulations, it is important to adopt a regtech solution that is flexible and can increase scope on a continuous basis.

Fenergo works collaboratively with clients to ensure all regulatory compliance and entity data management requirements are met fully and transparently through collaborative forums. These forums allow for co-creation and deliver a ‘Compliance by Design’ process to financial institutions.

Regtech has the potential to streamline the onboarding process and deliver a superior client experience by digitalizing the entire client journey from the very first touch point to routine trading. To achieve this, regtech utilizes a range of innovative technologies ranging from natural-language processing, biometric and social verification and robotic process automation. In doing so, regtech can reduce the investor onboarding timeframes from days to just minutes, resulting in a vastly improved customer experience.

Although it may take some time before we see regtech roll out across the AM and TA space in its entirety, the tide is changing as these entities embark on digital transformation strategies. Where possible, AMs should look upon regulatory change and the associated requirements as an opportunity to pivot to new digital business models and to differentiate themselves from their competitors by offering additional value add services.

Collaboration is key. If the regtech industry can bridge the gap between national and regional regulators, within that of the AM sphere, then the outcome could be very lucrative for all parties involved.

Become a bobsguide member to access the following

1. Unrestricted access to bobsguide
2. Send a proposal request
3. Insights delivered daily to your inbox
4. Career development