How Acin OpRisk network helps your firm keep on top of current FinTech compliance trends

Digital transformation is reshaping how financial institutions can manage regulatory compliance. Acin has built an Operational Risk Control data network comprising 14 of the world’s largest banks, and here is how what we are doing maps neatly to the majority of those compliance trends.

1. Crypto regulation 

As the crypto market continues to evolve, financial institutions are seeking more clarity on how the regulatory landscape is unfolding around the world and how to offer cryptocurrencies and other crypto assets to customers in a compliant way. Staying up to date on the latest regulatory developments is essential for navigating this fast-moving marketplace and avoid being stung by any unexpected regulatory changes or mis-selling risks.

Acin alignment: The peer network enables each firm to see what controls their peers have in place, such that anything they might be missing can be quickly considered and remediated using best in class consensus data. 

2. Systems integration

The rapid pace of digital transformation means financial institutions are relying on a growing number of governance, risk and compliance (GRC) systems to manage their regulatory commitments. Against that backdrop, industry stakeholders have been driving integration of GRC systems to streamline workflows, ensure data compatibility and reduce the need for compliance teams to manually extract data from different platforms, which is both time consuming and risks introducing errors.

Acin alignment: The network platform does not replace your GRC systems. We do however take  Operational Risk Control data from the GRC (and all the other strange places it lives in) and match it into the network. Clients then take best in class data out of the network to fill their gaps and upgrade lower quality Controls, all of which requires workflow and a configurable API.

3. ESG compliance

With global regulators increasing their focus on climate risk and urging financial institutions to put in place frameworks to improve climate resilience, more organizations are going to adopt regulatory technology to ensure they keep pace with evolving climate regulations. Regulators and enforcement agencies are already conducting investigations and handing out fines to financial institutions for making misleading claims about the green credentials of their products and services, underscoring the need for financial institutions to improve their ESG-related compliance.

Acin alignment: The network contains inventories that support banks across divisions, front to back, including an evolving corporate wide climate inventory including constantly updated regulations.

4. Data security

Tougher data privacy rules being introduced around the world means financial institutions must do more to protect customer data—not just internally but also with data that is being handled and processed by third parties, such as tech providers. Organizations need to carry out appropriate diligence on any third-party software providers they use to ensure customer data is secure. Global financial institutions also need to consider issues such as data residency and potential legal considerations about sending data across borders.

Acin alignment: We take significant volumes of medium sensitivity data and network it, the results of which are shared between other subscribers. The original data is data completely isolated through extensive application and data level security protocols combined with ISO27001 certification.

5. Increased automation

As compliance workloads have intensified in the wake of the global financial crisis and resulting deluge of new regulations, financial institutions are under increased pressure to keep their compliance budgets under control. As AI and machine learning technology advances, compliance teams can start to automate repetitive or time-consuming tasks, such as management information reporting and other admin work, allowing compliance teams to become more efficient and better allocate their resources.

Acin alignment: Acin’s NLP engine takes automation of largely unstructured Risk Control data to a new level. Our AI is applied to the analysis and matching of large amounts of new data entering the network as well as matching the myriad of regulations (to clause level) with each banks individual Risk Controls.

6. RegTech growth

The increased use of technology to manage and demonstrate compliance is spurring a rise in new RegTech companies covering everything from risk management and regulatory reporting to identity management and transaction monitoring. KMPG predicted RegTech spending would reach $76 billion this year compared to $10.6 billion in 2017. As that growth continues, financial institutions may find opportunities to invest in and or even buy existing RegTech businesses as part of their broader FinTech strategies.

Acin match: One of the main benefits of network membership beyond Risk Control completeness is knowing that your firm has all the Controls required by regulations in force across the geographies and jurisdictions your firm operates in.   

7. Trusted data

As digital transformation increases financial institutions’ reliance on data, organizations need to have confidence that the data is both accurate and usable. Poor quality data can expose institutions to potential financial and reputational risks, while relying on data that has been extracted in an unstructured format means banks have to convert that data into a format that is usable, increasing the risk of data being lost or corrupted in the process.

Acin alignment: The Acin network rests heavily on data standards in order to harmonize disparate data provided by each bank. Although we do not require banks to reformat their data, they do use our DTS 2.0 standard to improve the quality of their data for other reasons. Our AI is also helping banks outside the network accelerate transformation programmes by categorising important data, unclear data etc. allowing remediation teams to prioritize weaker areas by risk stripe, theme, deviant configuration, function, asset class and division.

8. Industry collaboration

Given this increased reliance on data, the financial industry is striving towards ‘semantic interoperability’ to improve data sharing and collaboration. This is especially important for risk management given the interconnected nature of financial markets—banks are only as strong as their weakest peers. As the financial crisis demonstrated, contagion can spread rapidly and severely cripple otherwise healthy financial institutions. Sharing data on risk can therefore improve the safety of the wider industry.

Acin alignment: Encouraging systemically important global banks to share data, but anonymously is fundamental to making the industry safer. Having achieved this we also allow other large and medium sized firms within the GSIB blast radius to selectively calibrate to this data in order to reduce their exposure to incidents.  

9. Competitive edge

Adopting technology for compliance can potentially give financial institutions a competitive advantage by predicting and identifying potential issues before they occur or help them enter new markets faster. Compliance teams can also carry out scenario analysis to stress test certain situations, enabling financial institutions to be better prepared for those events and to put in place processes to mitigate risks earlier than their peers (for instance, by reducing climate exposure). 

Acin alignment: As well as keeping each banks OpRisk landscape tightly synchronized with regulatory requirements and current with peer bank best practice, our Risk Intelligence function provides scenario analyses and other event based activity alerting that enables proactive decision making to continuously protect against unfolding threats.

10. Ongoing innovation

Digital transformation gives financial institutions and their compliance teams the ability to continue innovating and finding new ways to make managing and achieving regulatory compliance more efficient. Tech can help financial institutions be more agile in the face of emerging risks while also allowing compliance teams to focus on higher value work, helping banks become more resilient. 

Acin match: In the short term Acin is set to release functionality that allows firms to track and manage OpRisk performance down to the individual Control level, across each and every division of the firm, and then map overall landscape improvements to Pillar 2 Captial Adequacy requirements that justify reductions to the Regulator.   

Given the ever-tightening regulatory backdrop and the pressure on compliance budgets, making regulatory management more efficient should be a priority for all financial institutions. By adopting regulatory technology, compliance teams can access better data and generate deeper insights that can help improve their overall risk control environments and make the financial industry a safer place.

To get plugged into the latest compliance trends and improve your organization’s operational risk management capabilities, get in touch today.