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
As advisers risk losing two-thirds of FUA during the $3.5 trillion wealth transfer, two co-founders underscore why fostering trust with the next generation is vital to retaining intergenerational wealth.
As advisers seek greater insights into FSCP determinations, what are the various options considered by the panel and can a decision be appealed?
Amid the current financial adviser shortage, advice firm Link Wealth is looking to expand its financial literacy program for high school students across the country.
TAL Risk Academy has updated its range of ethics courses to help financial advisers meet their CPD requirements following adviser feedback, including interpreting FSCP determinations.
