On this 3-part tech weblog sequence, we’ve explored how legal and accountancy regulators are driving and responding to changes in technology and innovation in their respective professions. We’ve additionally thought of the commercial perspective, looking at interesting developments in these sectors , notably round using synthetic intelligence (AI).
In our last piece, we flip our consideration to the longer term, to supply some new views. With our future-gazing lenses in place, we handle the query: Will expertise transfer from being a useful gizmo, enabling companies to remain forward of the curve and their rivals, to being a crucial software, required to make sure companies adjust to their regulatory obligations and duties?
FROM ‘NICE TO HAVE’ TO ‘NEED TO HAVE’
There’s little doubt that using expertise and the urge for food for technological innovation within the authorized and accountancy sectors are progressing at a outstanding fee. Extra companies are realising the advantages to be gained from new applied sciences, main them to push the boundaries ever additional. We’re speaking about working extra effectively, extra productively, and having the potential to ship extra aggressive and progressive options to shoppers – it simply makes good enterprise sense.
The demand for expertise and innovation amongst authorized and accountancy professionals has been matched by their regulators and professional bodies placing these areas firmly on their strategic agendas . Coupled with this, extra tech start-ups are coming into the market, tailoring their merchandise particularly to the wants of the authorized and accountancy sectors. But regardless of this motion, the sensation stays that expertise and innovation continues to be in its ‘good to have’ section – sure, it makes good enterprise sense, and for some, it’s turning into seen as a ‘must have’ from a industrial perspective to remain forward of the competitors. However whereas we’re not fairly there when it comes to expertise being thought of an outright necessity, we might not be far off.
THE REGTECH HORIZON AND BEYOND
Together with FinTech and LawTech, you might need additionally come throughout one other time period known as RegTech. These phrases are extra than simply buzzwords; they’re the truth is fairly distinct actions which might be impacting each the authorized and monetary companies sectors. Regulatory expertise or RegTech is the time period to explain new applied sciences which purpose to innovate and create new mechanisms for a way regulated companies function from a regulatory perspective.
In 2016, the Monetary Conduct Authority (FCA) was the primary UK regulator to assist the time period RegTech, which it describes on its dedicated RegTech webpage as making use of to “new applied sciences developed to assist overcome regulatory challenges in monetary companies”.
So what do these applied sciences cowl? Trying to the monetary companies sector, one instance considerations how companies working within the banking sector discharge their regulatory reporting obligations. In 2018, the FCA and the Financial institution of England launched their Digital Regulatory Reporting project, which goals to enhance the timeliness and high quality of knowledge that corporations should present to the FCA as a part of its supervisory course of. The mission is at present in section 3, which is able to put in place modifications in how the FCA would require regulatory experiences and information to be delivered to them sooner or later.
We will already see, due to this fact, notably in relation to monetary companies, how using expertise is shifting, from being a helpful technique adopted by the commercially savvy, to an strategy which is able to very a lot be a necessity from a regulatory perspective; on this case, guaranteeing FCA regulated corporations adequately adjust to their reporting obligations. Whereas we haven’t but seen related initiatives being thought of by the authorized and accountancy regulators, there’s each risk that we aren’t very far off this new period of regulatory compliance.
Apart from reporting obligations, different regulatory processes which can be reworked by expertise, and that are prone to be on the regulators’ radars, are these which improve corporations’ timeliness and effectiveness of anti-money laundering (AML) and due diligence or ‘know your shopper’ checks. Earlier this yr IBM announced its growing focus in this area of regulatory compliance, as a way to “assist monetary establishments enhance alert triage and investigative efficiencies”. New applied sciences are additionally showing in the marketplace to reinforce compliance with information privateness and knowledge safety, each of that are among the many prime priorities for all regulated companies no matter sector.
FINAL THOUGHTS – WHAT SHOULD LAW AND ACCOUNTANCY FIRMS BE DOING?
For the second at the least, we’re merely gazing right into a future the place expertise is a necessity to ensure that corporations to adjust to their regulatory obligations; nevertheless, we predict this actuality to be a lot nearer than a distant risk. With technological developments progressing on the fee at which we’re seeing, that is the best time for corporations to begin their preparations in anticipation of, and readiness for, when their regulators would require them to take a forward-thinking strategy. With this in thoughts, and to conclude this tech weblog sequence, we set out under our three takeaway sensible steps for legislation and accountancy corporations:
- Re-evaluate core regulatory processes reminiscent of AML, KYC and information safety – step-by-step mapping of those processes will assist you to evaluate whether or not they’re working effectively as they’re, or whether or not they may do with some enchancment in sure areas.
- Word down all the important thing determination factors alongside every course of – do not forget that tough and thought of decision-making won’t be eliminated just by the implementation of the most recent expertise. Human data and experience, and importantly regulatory accountability, will stay firmly on the shoulders of each attorneys and accountants respectively, and this accountability is prone to appeal to much more regulatory consideration as we transfer into the longer term, with regulators eager to make sure that any new applied sciences adopted are delivering the outcomes supposed.
- Analysis applied sciences out there out there which can assist to reinforce the accuracy, timeliness, and effectiveness of your regulatory processes – with the expansion in expertise suppliers providing options to a variety of authorized and accountancy processes, a key concern for corporations and regulators alike will likely be guaranteeing that any resolution, whether or not developed by a third-party supplier or a agency’s inner growth staff, is aligned with the core regulatory obligations required of them.