REPORT “REGTECH – THE SIGNIFICANCE OF REGULATORY INNOVATIONS FOR THE FINANCIAL SECTOR AND THE STATE”
The costs of regulation and supervision currently consume from 7% to even 23% of the total budget for technological implementations and the costs of central functions of Polish banks. Regulatory technologies (RegTech) are a way to reduce the rapidly growing costs on the part of financial institutions related to the post-crisis regulatory tsunami – claim the authors of the report “RegTech – the importance of regulatory innovation for the financial sector and the state” developed by the FinTech Polska Foundation in cooperation with the Center for New Technologies Law at the University of Warsaw, Accenture, Bird & Bird law firm and PwC.
“An active approach to RegTech, both by financial institutions, but also by the state understood here as an effective regulator and supervisor, will give an opportunity to increase the competitiveness and efficiency of not only banks and other financial institutions, but also to optimize supervision in Poland. RegTech is also an opportunity for technology companies that will create new solutions for banks and the supervisory authorities themselves, ”says Dr. Paweł Widawski, President of the FinTech Poland Foundation.
RegTech is, on the one hand, tools for increasing the efficiency of financial institutions in connection with the need to ensure compliance with the regulations and requirements of regulators in this sector, and on the other, it is an opportunity to bridge the technological gap in the area of efficient communication between the supervisor and supervised entities. It also creates the possibility of increasing the effectiveness of the supervisory authority itself and a change in the paradigm of exercising supervision in the financial services sector, provided that the introduction of RegTech is also accompanied by a review and modernization of supervisory processes. The effect of using RegTech in conjunction with the reconstruction of supervisory processes may be a more effective use of information from banks by the regulator, better use of own resources as well as achieving synergy in the supervisory authorities themselves and between supervisors examining the same areas of bank operations (e.g. KNF and GIFI, KNF and UOKiK / Financial Ombudsman).
RegTech is structural in nature and is applicable in all regulated sectors, mainly in banking, but also in telecommunications and energy. It creates an opportunity to increase trust in business relations and banks with the regulator, it can increase transaction certainty, reduce legal and regulatory risks, while reducing costs, both for supervised and supervisory bodies. Therefore, it is essential for the dynamic and healthy development of the financial innovation ecosystem.
RegTech solutions support the collection and analysis of data in banks required by regulations, their reporting to the regulator and quick and effective analysis, especially in the case of mass transaction data, using such technologies as big data, advanced analytics, process automation (robotization), machine learning and data visualization.
“The growing expectations of customers and the dynamically changing regulatory environment mean that banks wanting to increase or maintain their competitiveness are already willing to use RegTech companies, often offering a new look at existing services or processes. As shown by positive experiences from countries where the local regulator has decided to actively cooperate with RegTech companies (e.g. as part of incubators or “regulatory sandboxes”), such an approach benefits not only these companies but also the regulator himself “- adds Karol Mazurek, Director Managing Accenture in Poland.
“We are glad to be among the authors of the report. This is a very important initiative for the entire financial sector and the regulator. FinTech has been operating in the financial environment for some time, being associated with modern, customer-friendly offering of services, as well as improvement of processes and IT security of financial institutions. RegTech brings similar improvements in the institution-regulator relationship. Therefore, for both, it is a possibility of freeing up many internal resources so far involved in collecting and processing a number of supervisory information, and thus a chance for more effective management of the institution and its compliance with the law, “said Sławomir Szepietowski, Managing Partner. the Polish office of Bird & Bird.