the “noise” of regulations that are not applicable. A High-Reg Tech solution
provides a consistent approach and helps to ensure that regulatory changes
are not missed. Another major benefit is the ability to distill reports via
information imported into the system, so that the evaluation of the regulatory change is demonstrable to senior management, the board of directors,
internal audit, and to regulators.
Perhaps the biggest challenge in implementing a High-Reg Tech solution
is with internal adoption. The compliance and business users of these tools
must be ready and willing to make the software a part of their everyday work.
In order to help encourage user adoption, banks might consider establishing
a training program, as well as sharing written processes for all users.
No matter what level of tech used in your approach to regulatory change
management, the best approach is one that is able to be applied consistently
and is repeatable.
Block Chain, Bitcoin and AI… Oh My!
It’s an exciting time to be in banking compliance. Admittedly, the words “
exciting” and “compliance” (and maybe even “exciting” and “banking”) are rarely
coupled as a concept! However, new and emerging technologies promise to
transform our way of managing almost every part of the industry—including
our compliance departments themselves. In fact, the transformation has already
begun: Deutsche Bank made the news in 2017 by announcing it is piloting
the use of artificial intelligence for some of its regulatory compliance tasks. 2
Perhaps the most immediate impact of technological advances such as
big data, bitcoin, and block chain to your regulatory change management
program, may be in the assessment of any new regulations surrounding
them and the accompanying changes to policies and procedures. However,
artificial intelligence (AI), may be particularly transformative in terms of the
management of regulatory change. While we’ve identified No-, Low-, and
High-Reg Tech methods of managing regulatory change, we might consider
some of the work in this space as Reg Tech 2.0.
The Oxford Dictionary defines AI as “…the theory and development of
computer systems able to perform tasks normally requiring human intel-
ligence, such as visual perception, speech recognition, decision-making, and
translation between languages.”
Compliance departments staffed solely by robotic compliance officers
is not necessarily an anticipated use of AI. Rather, within AI, Natural Lan-
guage Processing (NLP) and Machine Learning are particularly adept at the
administrative acquisition of and review of data. In short, this is the visual
perception and translation-focused use of the technology.
AI technologies will be able to gather and sift through vast amounts of
data quickly, saving time and greatly reducing the administrative burden on
compliance officers. In fact, software vendors are already developing these
alternative methods of gathering and evaluating data. I mentioned earlier the
roughly 1,200 unique regulators across all jurisdictions globally generating
about 2,000 regulatory change events daily. By employing AI technologies,
(including pattern recognition to extract data and methodologies that would
classify the documents and extract facts and metadata), we enable the (
traditionally) human compliance officer to focus instead on the actual work
of compliance (such as the review, evaluation and assessment of the impact
of the regulatory change to the business), rather than just data acquisition.
You’re Out of the Woods…Step into the Light
The theory and importance of a regulatory library is a key foundation of your
bank’s regulatory change management program. And. the most common
approaches to managing regulatory change—No-Reg Tech, Low-Reg Tech,
and High Reg Tech, as well as new technologies, are poised to transform and
streamline the work of the modern compliance office.
Regulatory change management is not a one-size-fits-all proposition. The
particular methodology that you employ for managing change will depend
upon your bank’s size, jurisdictions, products, people, and their ability to
adapt to process change. The good news is that where you are now does not
dictate where you will remain. This is an evolving process.
Through thorough self-assessment, your bank can determine what tools
are needed to enhance your regulatory change management program and
thereby meet the ultimate goal of having sustainable, repeatable processes.
With these pieces in place, you will have confidence knowing the regulations needing compliance, and you’ll be fully ready when Internal Audit,
the Board, or a regulator stops by for inspection. So, click your ruby slippers
three times—you’re on the way home! ■
ABOUT THE AUTHOR
BARBARA BOEHLER, J.D., LL.M., CCEP, is a compliance consultant and securities
subject matter expert at Wolters Kluwer. She is an attorney and compliance
officer with over 16 years of experience in the financial services sector, where
she has developed, monitored and assessed both broker-dealer and investment
advisor firms’ ethics and compliance programs. She formerly served as global
chief compliance officer for Arete Research, a limited-purpose, FIRA-registered
broker/dealer specializing in equity research. Before that, she held compliance
leadership roles at Fidelity Investments, JP Morgan Invest, Standish Mellon
Asset Management, and Babson Capital Management.
She holds a Juris Doctor degree from Suffolk University School of Law, and
a Masters of Law degree from Boston University School of Law. A certified compliance and ethics professional, she currently serves as an adjunct lecturer on
the practice of compliance at the law schools of both Suffolk University and
Boston University. She can be reached at firstname.lastname@example.org.
Quotes within this article were taken from the movie, The Wizard of Oz, 1939, or the
book The Wonderful Wizard of Oz, by L. Frank Baum.
1 Please refer to regulatory and risk concerns of banks as measured in Wolters Kluwer’s
2017 Regulatory & Risk Management Indicator survey, http://www.wolterskluwerfs.com/
2 “Deutsche Bank Deploys Artificial Intelligence to Help Meet Demands of Regulatory
Compliance” The Wall Street Journal, April 18, 2017.
The theory and importance of a regulatory
library is a key foundation of your bank’s
regulatory change management program.
And the most common approaches to
managing regulatory change—No-RegTech,
Low-RegTech, and High RegTech,
as well as new technologies, are poised
to transform and streamline the work
of the modern compliance office.