Article Synopsis :
There are four key messages contained within this regtech paper from DFIN:
- regtech solutions require standardisation of data;
- regulators can maximise the effect of these solutions by coordinating changes in regulations, technology and data;
- audit and quality requirements are essential for the new structured data frameworks as they replace document-based disclosures; and
- by embracing standard business reporting (SBR), regulatory agencies would create an environment where a common data structure for multiple regulators’ regimes exists.
SBR already has some heavyweight proponents. It is used by the authorities in Australia and the Netherlands to allow government and industry to work together to change regulations, technology and data in a coordinated fashion.
Australia’s standardised data structure began in 2008 and was modelled on the work done by the Dutch government.
In the Netherlands, SBR is the only way many regulatory reports are submitted to government.
The government of Estonia has gone one stage further by adopting a common data structure for all government interactions by companies and individual citizens.
This should allow for:
- automated reporting;
- faster, better insights; and
- share information flows.
Much regtech is hobbled by poor data, so quality and proper audit are essential to ensure higher quality data.
In the US, the Financial Transparency Act along with other Congressional developments offer an opportunity to review the way data is submitted.
The reforms being sought by the Data Coalition would require financial regulators to adopt standardised data formats across all the information they collect now.
Achieving better data doesn’t necessarily rely on the use of SBR, says the paper’s summary. However, regulators have a critical role to play in achieving the full potential that regtech offers and requires “the overall commitment by regulators to demanding structured data that is presented in a consistent and easy-to-use way.”
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Digital Insurer's CommentsInnovation is only ever as good as the trailblazers who implement it and the regulators who oversee its implementation.
Regulatory authorities have an unenviable task of overseeing the rapid expansion of the digital economy in their jurisdiction.
It is not only their own jurisdiction they may require to receive data on and from.
Unless they adopt a new standardised approach to data submission, they will quickly find they are unable to process the regulatory data they require and fulfil their remit to protect their markets.
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