As the scale and pace of regulatory change grows, along with the financial and reputational risks of non-compliance, businesses must be able to manage compliance risks faster and more efficiently. This has driven an increasing focus on regtech, a family of solutions designed to digitise and automate operational risk and compliance.

Deborah Young is CEO of The RegTech Association, a not-for-profit founded to bring together the key players in Australia’s growing regtech sector. She says that while regtech was born out of the financial services industry, it can now be applied to any regulated industry – from utilities and telecommunications, to farming and food production.

And with Australia already established as the world’s third largest regtech hub, the stage is set for regtech adoption to accelerate.

What is regtech and why is it important?

Jesse Arundell, Head of Emerging Technology at CommBank, says regtech “supports teams with software and systems to help manage risks, stay compliant and deliver better outcomes for customers, at scale across the entire organisation”.

Young says that’s important “because it provides risk and compliance professionals, and many others within institutions, with tools to service risks earlier, provide more transparent information, make better business decisions, and grow more sustainable businesses.”

It does so by drawing on a range of technologies, both mature and emerging. In a 2021 survey of 400 regtech solutions, Deloitte identified the key technologies creating value in the regtech market, including:

  • Big data and analytics, improving monitoring, reporting and decision-making across the enterprise.
  • Voice and text recognition, to identify regulatory requirements and track compliance;
  • Smart contracts, to automate compliant contract creation and execution;
  • Cloud computing, enabling businesses to create scalable platforms that connect the business to multiple data sources and regulators;
  • Blockchain solutions, to track and evidence compliant transactions; and

Driving efficiency and new business opportunities

Arundell says implementing regtech can bring immediate benefits. “Regtech drives a reduction of risk and a gain in efficiencies. Software empowers people, leading to an increase in quality at lower cost to the business,” he says.

By collating and analysing data within and outside the organisation, regtech can be harnessed to automate everyday business processes, allowing for scalability and consistency.  And it can equip businesses with the tools they need to make faster and more accurate decisions.

“It empowers people in the organisation to provide value through risk and compliance advice,” Arundell says. “Using software and artificial intelligence, they can detect things faster, interpret patterns in transactional data or recommend changes to the business or products.”

Those insights can bring benefits beyond the organisation itself. According to the Productivity Commission, data collected through the regulatory technology underlying the Single Touch Payroll system not only enabled the Australian Tax Office (ATO) and Australian Bureau of Statistics to better track the economic impacts of  Covid-19, it also provided the ATO with critical information to determine eligibility for JobKeeper.

Above all, Young says regtech enhances trust – for customers as well as regulators.

“Fundamentally regtech is really important because it adds a layer of trust … whether I'm dealing with my bank or my law firm or my telco or my energy company, there is a presumption of trust built in.”

By creating a chain of assurance, Young says regtech can help drive business opportunities. Young points to the Federal Government’s recently announced investment of $33 million in regtech to help farmers and small-to-medium enterprises participate in the Renewable Energy Target and report on carbon projects, simplifying compliance and creating opportunities to attract new investment.

Future trends in regtech

Regtech is increasingly being taken up by a range of regulated industries, from telecommunication and energy companies preparing for compliance with the new Consumer Data Right, to pharmaceutical and healthcare businesses.

And the benefits aren’t limited to large institutions. A growing area of regtech is in developing workforce management solutions that can streamline everyday processes for small businesses.

“Workforce solutions provide a secure platform to collect all your employee’s sensitive data, including tax and super information. The system can manage the end-to-end employee lifecycle, from maintaining accreditation and ensuring correct payment, right up to the exit process,” says Young.

Arundell predicts that demand for the technology will continue to rise – facilitating the sharing of data between sectors.

“There is the opportunity for mass adoption, both domestically and internationally. This would not only help multinational organisations, but create better connectivity between different markets.”

Young sees enormous potential for regtech to play a role in helping organisations achieve their environmental, social and governance (ESG) goals. “As regtech starts to mature as an industry, there is more professional investment capital flowing in. To attract investment, businesses need to state their personal commitment to ESG, so regtech solutions must clearly align with ESG principles.”

Learn more about regtech at the AccelerateRegTech 2022 conference. Information can be found here

Our regtech experts

Jesse Arundell leads the Emerging Technology team at CommBank and is responsible for running a portfolio of disruptive and transformative innovation initiatives across the bank, focused on accelerating its adoption of new and emerging technologies (e.g. AI, Regtech, 5G , DLT, Quantum) within its businesses. He also leads the charge on scaling the bank’s internal crowdsourcing program and its technology “vision lab”. His team has helped the bank win several awards including Most Innovative Approach to open innovation by Spigit and iTNews’ IT Project of the Year for building the bank’s IT Risk Sustainabity score.

Outside of the bank, Jesse co-leads the Australian Chapter of the International Association of Innovation Professionals, represents Australia during the development of innovation management standards at the International Standards Organization and sits on the board sub-committees of Silicon Quantum Computing company, Australia’s first quantum computing start-up.

Deborah Young is the founding CEO of The RegTech Association (RTA), a non-profit industry member association founded in 2017. The RTA seeks to accelerate the adoption of RegTech to solve regulatory and compliance challenges and to position the association as a centre of excellence. Deborah is an accomplished executive, non-executive director, mentor and strategic business consultant. She has more than 20 years' experience as a senior executive across financial services, including investment banking, private equity, venture capital, insurance and superannuation spectrums. She has worked at AVCAL, Microsoft, Digivizer, Data61 and muru-D, Telstra's accelerator. She’s one of the AFR’s 100 Women of Influence for innovation, an advisor to the UTS Business School MBA in Entrepreneurship and Executive MBA programs and an active mentor to women.

Find more information about technology at CommBank Foresight – insights for future-facing businesses.