With financial technology (FinTech) now able to handle previously time-consuming manual processes like data consolidation or reporting, wealth management has entered a new, more client-focused era.

Digital delegation based on automatization allows independent financial advisors (IFAs) to concentrate on delivering highly personalised client advisory and value-added services.

However, when it comes to compliance the key is to keep ahead.

The mere implementation of regulatory technology (RegTech) is not enough.

By adopting a hybrid approach – FinTech that integrates with RegTech – wealth management professionals can build a comprehensive forward-looking compliance strategy.

The right RegTech will update automatically so you’re ready for any future regulatory changes.

Other substantial benefits of this innovative technology include:

  • Higher revenue
    Automated RegTech solutions speed up onboarding and KYC and AML checks resulting in better customer experience and higher retention rates.
  • Lower costs
    Compliance costs are reduced as fewer manual checks are required to assess false positives when using RegTech.
  • Enhanced efficiency
    Scaling customers at a higher volume is faster and more efficient. RegTech allows compliance officers to focus on other areas like investigation and prevention.
  • Reduced risk
    Penalties, fines, and reputational damage are less likely to occur as RegTech makes compliance with AML, KYC, and other requirements easier.

Why is Regulatory Compliance
Such a Mission?

The financial industry is heavily regulated with 45 new regulation updates issued every week.

Without the use of automation technology, it can take 30 minutes to validate each client interaction against all the necessary regulations.

This process can be further slowed by ambiguous wording that fails to clarify what a regulatory body is looking for.

As a result, aligning every transaction with hefty chunks of legislation such as the EU’s new General Data Protection Regulation, MiFID II, and FIDLEG/FINIG, is complicated and costly.

An already swift pace of change is likely to quicken as cryptocurrencies gain momentum, global markets grow in complexity, and more countries attempt to pass legislation aimed at reducing risk in the digital age, where hacking is a sadly accepted norm.

The evolution of more powerful analytical tools and practices to measure and identify compliance-related risks and bad behaviors means regulators are expecting more from wealth management firms.

And it’s not just regulators pressing for a shift in focus towards good governance and more ethical business practices.

The ‘woke’ digitally- savvy generation wants to be able to manage wealth and access information about their assets through their mobile devices.

The Digital All-in-One Approach

With all these factors to contend with, a reactive ‘tick box’ approach to compliance just doesn’t cut it.

Instead, the modern wealth manager must take a proactive hybrid approach, embracing time-saving RegTech solutions to work smarter and using the hours saved to create a forward-looking risk mitigation strategy that forms an integral part of their overall business strategy.

To ensure you are starting with a clean compliance slate you can hire a consulting company to audit your business and help you get compliant. The next stage is to find a way to beat time pressures by working smarter.

RegTech plays a vital role in reducing the administrative aspects of compliance. Many regulations are now machine-readable which allows to scan them and create digital rules. Later, RegTechs are delivering those digital rules to your PMS/CRM solution to leverage on them.

Fueled by digitalized regulations, your PMS/CRM can complete in minutes a routine binary, compliance check that a human would take hours to complete.

The smart PMS solutions can also work a 24-hour day, extrapolate trends, test vast quantities of data, and create visualized outputs.

Using PMS integrated with RegTech means your compliance team won’t have to waste time completing repetitive AML-related tasks or waiting around for responses to regulatory queries from your legal team.

Technology can also fix the AML “Know-Your-Customer” rules, which currently block or slow down the client acquisitions by wealth management firms.

New digital identity techniques can screen nearly everything, efficiently and accurately.

All-in-one PMS/CRM solutions are offered with automatic data back-ups as well as disaster recovery plans.

How Compliance Can Add Value

Freed from these burdens your compliance team can focus on issue remediation and escalation, root cause analysis, investigations, and overall business advisory.

They can become actively involved in shaping your company’s strategic direction so risks can be anticipated and plan revised before problems occur.

You can reduce the need for significant reviews and revisions of new products or promotions by ensuring your compliance team actively work with your marketing team and product development team.

Without their involvement, you could end up paying for rewrites of adverts bearing content that doesn’t meet regulatory demands.

Larger companies could consider growing their legal team to help monitor the actions taken by the business against external and internal risk and legal rules.

Educating everyone in the company and getting them to acknowledge and accept some responsibility for compliance will help to establish good practices and a company-wide sense of accountability.

Ultimately the buck will stop with a central compliance team or officer who has oversight of the processes used, but everyone’s job will be easier if a company-wide approach of working together on compliance is applied.

Get Peace of Mind with WealthArc

The WealthArc Platform automatically assesses and monitors risk to ensure you comply with current legal regulations.

It is integrated with top Swiss RegTechs such as Investment Navigator, APIAX, EdgeLab or Indigita, who digitalize compliance rules provided by Big-4, fund managers or legal firms.

Certainty and clarity are provided by a simple mechanism. You will receive an alert if any compliance issues are raised, with no need to agonise over details or wait for a response from your legal team.

WealthArc makes it easy to adapt to the ever-changing compliance landscape as its RegTech partners’ updates automatically to include each new regulation.

If you want to see how WealthArc can transform compliance for you, please visit our website where you can also book a product demonstration.

Krzysztof Gogol
Krzysztof gained his insight into the finance industry during his time at globally respected Swiss bank Vontobel in Zurich. He always wanted to create solutions that any wealth manager can use, without having a rack of supercomputers and large IT staff in their office.
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