Technology and Compliance - The Ever-changing Landscape

By Terrence Lim, CRO, ZhongAn Technologies International Group Limited

Terrence Lim, CRO, ZhongAn Technologies International Group Limited

Fintech, the buzzword of today’s business world continues to become part and parcel of our lives. Its continuous developments are providing more opportunities for new business ventures as well as creating a sea change with regards to the regulatory expectations. It continues to pose challenges to compliance personnel to strike a balance in promoting innovation, meeting regulatory requirements, protecting customers, and mitigating cyber risk exposures.

Technologies such as artificial intelligence, blockchain, cloud computing, big data analytics and internet of things are successfully disrupting traditional business models. Similarly, the roles of compliance need to change by embracing these technologies. Making use of their capabilities to deliver a robust framework in a “techie” way saves time, effort as well as compliance cost with more efficiency.

With the “invasion” of fintech, regulators need to change and embrace technology in their supervisory framework. They need to strike a balance in their supervision activities while ensuring the interest of the general public is protected yet allowing these new technologies and businesses to prosper. While we have seen increased regulatory expectation with the issuance of new circulars, guidelines or directives around fintech, the pace remains slow as regulators are generally risk averse.

Compliance Function will be Able to Increase its Relevance and Effectiveness by Putting Technology as an Enabler

As time progresses, there is a rising trend with the compliance function getting more visibility within the organization as demonstrated by their participation in key projects, direct reporting line to the Board and key management executives. The growth in the size of corporate compliance staffs and in their compensation also illustrates this increasing importance. Compliance knowledge needs to be broadened to cover digital payment, cloud computing, open APIs payment security, and more.

How can compliance personnel adapt to serve their companies?

1) Take responsibilities to address new regulatory compliance requirements – It is important for compliance officers to keep abreast of these new regulatory developments and lead the team to understand the requirements and facilitate line management which creates a plan to meet these regulatory expectations.

2) Develop trust within the team – Compliance is never meant to be alone. It must work collaboratively with all functional areas to gain the greatest benefits for the company. Be a trusted adviser and this may promote greater accountability throughout the organization.

3) Keep technology development on the regulatory radar – Ability to keep up with the key technology developments may be helpful to enable a more efficient regulatory compliance. For instance, the use of artificial intelligence in customer due diligence, financial crime detection, and more.

4) Focus on cybersecurity – Putting in place a resilient cybersecurity framework to protect business data and personal data of existing or potential customers, and to ensure continuity of business operations is inevitable. This will always be a key concern from financial regulators.

Looking Forward

Compliance function will be able to increase its relevance and effectiveness by putting technology as an enabler. Technology can promote better decision making due to improved data analytics, better collaboration with all functional areas, better understanding of how compliance can help the business to deliver value and more efficient automation and workflow for compliance monitoring activities.