Big data will boost regulatory monitoring
The advent of big data tools and the ability to access data will enable regulators of the banking and financial services sector to identify and respond to systemic issues without having to rely on customer feedback and self-reporting, according to Finsia.
Chief executive and managing director, Chris Whitehead, said regulators had not hitherto had the ability to supervise and monitor the industry themselves without being prompted by customer complaints, feedback, and self-reporting from the industry.
Speaking on the possibilities that regtech had to offer, Whitehead said big data tools could enable regulators to spot systemic issues in the industry in a timely manner, as well as identify unusual behaviours or differences between the ways in which different institutions or firms were providing customer services and products.
"It's essentially about pattern recognition in the same way as for instance retail companies and banks are using pattern recognition to analyse customer behaviours and for instance, identify customers who might be open to a new product or might be potentially going to move the business elsewhere," Whitehead said.
"It really opens up a much more proactive capability and a much more productive capability."
While big data had not evolved sufficiently to enable pre-emptive action by regulators, it could enable earlier action. While customer feedback was vital, it would have to flow in at a volume that would warrant regulators to suspect systemic issues rather than a one-off problem.
"[Big data] certainly should speed things up. Therefore if you see the scale of issues, one would hope would be substantially reduced if you can act faster," Whitehead said.
"I guess the challenge for the regulator is often you may get customer complaints for instance but until you get a number of customer complaints it's very hard to identify, how significant is the issue?
"Is it a one-off, which is obviously, from a regulatory sense, less of a concern or it will be less impactful?"
AUTHOR
Malavika Santhebennur
Recommended for you
A quarter of advisers who commenced on the FAR within the last two years have already switched licensees or practices, adding validity to practice owners’ professional year (PY) concerns.
Integrated wealth and financial services group Rethink has launched a financial planning arm called Rethink Wealth to expand beyond property investing and into holistic wealth management.
While adviser numbers continue to slowly creep back up, the latest Wealth Data analysis reveals they would actually be in the green for the calendar year if it weren’t for so many losses in the limited advice space.
Iress has appointed a chief AI officer to spearhead the fintech’s strategic focus on AI, with chief executive Marcus Price describing how the technology opens the doors to a “new frontier for wealth advice”.
