DFIN: How Data Will Determine the Future of RegTech

Article Synopsis :

There are four key messages contained within this regtech paper from DFIN:

Regtech must improve if it is to support the economy

• 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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