EBA proposes measures to support RegTech adoption
In a new report, the European Banking Authority (EBA) has presented proposals to encourage the adoption and use of RegTech in the EU, which its suppliers say increases efficiency and effectiveness and reduces the impact of regulatory changes.
RegTech is most commonly used for anti-money laundering (AML), anti-terrorist financing, fraud prevention, prudential reporting, ICT security, and credit scoring, the report notes. .
While the EBA has found that the regulatory framework is not the main obstacle to the adoption of RegTech, “a lack of common regulatory standards in member states could constitute obstacles to wider adoption of RegTech solutions on the market. single market, “said the EBA.
EBA’s proposals to support the adoption and scale-up of RegTech include activities to increase knowledge and reduce skills gaps among regulators and supervisors, to take action to “harmonize legal and regulatory requirements ”and to leverage the role and expertise of the European Forum of Innovation Enablers (EFIF) and regulatory bodies and innovation hubs as testing grounds for RegTech solutions.
According to the EBA, financial institutions (FIs) cite improved risk management, monitoring and sampling capabilities, as well as reduced human error, among the main benefits of RegTech solutions. RegTech vendors, on the other hand, cite the ability to improve efficiency and effectiveness and reduce the impact of regulatory changes.
Most of the challenges to developing the RegTech market stem from internal factors including security, data quality and privacy, interoperability and integration with legacy systems, and limited knowledge of RegTech solutions.
To learn more about RegTech’s promise, read our 2020 interview with Tsafrir Attar, Vice President of Digitization at Surecomp. “Previously, regulations were very slow to adapt and approve different technologies,” he told PYMNTS last year. “Today, we see loud and clear, now the regulators [are becoming] more supportive of that, and understand that the only way to help the industry is to approve new tools. “