Hugo Larguinho Bras, partner at e*finance Consulting Reply, spoke to Information Age about how RegTech capabilities can aid Asset Management and Asset Servicing companies in navigating new regulations
Digital capabilities are playing an increasingly large role in financial services operations, able to increase efficiency, improve customer experience, and reduce strain on staff. However, asset management and securities companies often struggle to get to grips with new, more stringent regulations while continuing to deliver value for their clients. This leads to a need to improve on their processes to ensure that they stay compliant.
To help tackle this issue, e*finance Consulting Reply collaborates with financial companies and recommend the best solutions in line with their existing infrastructure and processes. Asset management and securities customers can leverage a selection of regulation technology (RegTech) capabilities that fit their specific goals and ways of operating. With the RegTech market becoming more varied over time, this guidance is proving vital towards compliance success and maintained user service.
Hugo Larguinho Bras, partner at e*finance Consulting Reply — a Reply Group subsidiary — explained the key obstacles that the IT services company is helping its clients overcome when it comes to staying compliant, and how RegTech is disrupting the financial services space.
Defining your transformation approach
According to Hugo Larguinho Brás, establishing a model for regulation management, while ensuring that any risk is minimised, in a short space of time, is a prominent challenge for asset and securities managers.
“All companies have some specificities, and so it’s difficult for them to navigate amongst the various offers that we see on the RegTech market,” he explained.
“It requires some time and analysis to make the right choices to define the future model. So, if some of our clients need to quickly correct pitfalls immediately to show the regulator that they are treating the case, then it doesn’t leave much time to define the ideal model.”
He recommends filing a request for proposal (RFP) to understand the possible options and which vendors can deliver value. From here, organisations can properly prepare for a time-sensitive deployment of capabilities.
When advising relevant executives on how best to go about this step, Hugo Larguinho Brás recommends the following actions:
- Anticipate regulatory evolutions. “Adapting to new regulatory obligations with tight deadlines forces you to do the minimum viable to comply, undermining your capacity to create value.”
- Raise concerns up to the highest level possible in the organisation: “Most needs regarding data will be shared by other entities throughout the company, so a common solution might need to be implemented across all departments, which helps strengthening the sponsoring and sharing costs.”
- Ensure that the transformation is agile: “Once the strategy is decided, and as you go through your initiative, you may discover new opportunities to create value that you hadn’t thought of before. So, you need to remain able to address any required changes on the journey. By achieving this, the target can evolve as you transform.”
- Have the right business and IT experts in place: “It’s important to combine the right level of subject matter experts, who know your processes and the regulations, with the right technologists, who know the technology that you will deploy. Having the buy-in and involvement of all internal departments (Compliance/Risk, Business, Operations and IT) is essential. A transformation project can only work if everyone agrees on the direction to go.”
- Ensure proper data quality: “It is often a challenge to capture all the data required by a regulatory process, and much of that data is not clean because it has not been checked or updated for a long time. This carries a risk to the deployment of the new process. Many regulatory initiatives require a data cleaning as part of the first steps.”
RegTech capabilities driving value today
Two main types of RegTech capabilities are helping financial service institutions stay compliant: software that encompasses the whole system — for example a full client onboarding cycle — and software that manages a particular process, such as reporting or document management.
Hugo Larguinho Brás explains: “The technologies that handle the whole process from A to Z are typically heavier to deploy, but they will allow you to cover most of your needs. These are also more expensive and often more difficult to adapt in line with a company’s specificities.”
“Meanwhile, those technologies that treat part of the process can be combined with other tools. While this brings more agility, the need to find and combine several tools can also turn your target model more complex to run.”
“We see more and more cloud and on-premises solutions available to asset management and securities companies, from software-as-a-service (SaaS) and platform-as-a-service (PaaS) deployed in-house, to solutions combined to outsourced capabilities. Recently, artificial intelligence (AI) and machine learning (ML) have entered the RegTech space, adding further intuition in line with demands while continuing to evolve.”
While variety is always healthy no matter the market, it’s vital that companies make the right choices. One misstep can bring down your whole strategy.
The benefits of a services partner
E*finance Consulting Reply distinguishes itself from competing consulting service providers by bringing together expertise from an array of disciplines, owing to Reply Group’s collaborative approach across subsidiaries. With company needs, and those of their respective clients, continuing to evolve, having insight on hand for whenever it’s needed is paramount to delivering value.
“We have the right mix of subject matter experts, people who understand the regulations, the concrete operations and the technological expertise.” said Hugo Larguinho Brás.
“As part of Reply, a big IT consulting group, we have this capacity to help our customers access any tool available on the market in terms of functionalities, deployment complexity, scalability and maturity. This is our differentiator.”
“So when it comes to entering the RegTech space, this is our differentiator, and we also have the right combination of SMEs and technological capacity.”
This article was written as part of a content campaign with Reply.
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