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We live in a fast-developing world, with technology driving disruption to the way in which we do things and interact with each other. One industry that is benefitting from this world of change is the business of compliance, which is one of the fastest growing sectors of the economy. While it is a key driver of compliance needs, technology may also be the main solution to easing compliance burdens.
We currently live in the age of digitisation and the cloud. Businesses are magnitudes more productive due to the ease in which digital information can be gathered, processed, analysed and used to make profit-generating decisions. Gone are the days where it might take weeks to process a simple application or request. Something as simple as applying for a tax file number for your 16 year old daughter now literally takes less than a minute (or maybe 5 if you haven't already set-up her myGovID).
The cloud has meant that businesses can operate from anywhere. Software is no longer installed via a CD, but is instead provided as a cloud service. This means that software updates are automatic and users can share information in real-time.
But, just like the need for traffic lights and seat belts in regulating the advent of the automobile, the current digital innovation also requires new ways of thinking about customer protections. The big one in this regard is privacy and confidentiality. The ability to share information instantaneously through the cloud and over the internet increases the risk of inappropriate disclosure of information, It also increases the risk of data theft. Consumers expect the data to be protected rigorously.
Businesses are also required to manage the quality of the information that they distribute. This might be for marketing purposes, advice purposes, regulatory purposes, etc. It is vital that information is correct, accurate and not misleading. The avenues for information distribution is quite vast in the modern world, with many businesses moving more of their communications to email and social media. This can create issues when it comes to quality control of information due to the amount of data that can be spread instantaneously.
Protecting and moderating information can add significantly to the cost of doing business. Fortunately, there are many technologies that can help in this regard. Much of the work done in regulatory technology (RegTech) over the past decade has focused on helping business manage this burden. Artificial intelligent (AI) technologies are the main tools that have been developed to date, with the machine able to curate information fast and efficiently.
Blockchain technologies are also at the forefront of many of the developing RegTech innovations. The blockchain is simply a mechanism of storing information and it has some particular advantages when it comes to maintaining and auditing information - most notably due to the inability to amend or destroy past information. This provides a strong incentive for the storing of quality data.
RegTech is likely to grow hand-in-hand as technologies continue to improve. As new technologies are adopted, new threats are likely to emerge that will require ways to mitigate any adverse effects. As long as the cost of managing new risks is less than the benefits of the innovation, then it is likely that this symbiotic relationship will continue on indefinitely.
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