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Cover your blind spots with a comprehensive RegTech ecosystem
Why RegTech Demands Visibility
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contents
Putting it all together
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Arriving at a unified, coherent platform
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Picture a connected RegTech ecosystem
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Start connecting the dots
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Examine the blind spots
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Step back and take a broader look
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Has the regulatory landscape gotten too complex?
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Experience trading compliance with FIS
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Many regulations were put on hold in 2020, while capital markets firms concentrated on continuing business amid COVID-19. In 2021, major regulations will come to the forefront. From anti-money laundering (AML) rules, Fundamental Review of the Trading Book (FRTB) and RegBI to OTC reform and the LIBOR transition, you must be able to act swiftly and smartly to ensure compliance and get the greatest return on your investment. However, the trading compliance ecosystem presents a unique set of technology challenges. Large volumes of transactions trigger complex and overlapping rules that define which transactions are permitted, who may transact them and what parties are behind them. Firms must also track and analyze communications, as well as stay on top of reporting requirements across multiple regulatory regimes and jurisdictions. Given the circumstances, do you have confidence in your trading compliance?
94%
The number of regulatory changes a bank has to deal with every day has increased from 10 in 2004 to 185 today. That means interpreting and implementing a regulatory change every 12 minutes.
DID YOU KNOW?
Insurance companies are more aware than ever of the wealth of information at their disposal. Their ability to extract value from data using advanced analytics has become critical to competitive advantage. For actuaries, the pressure is on to gain greater insights from big data and rapidly transform modeling results into business intelligence.
Jonathan Silverman Director of insurance solutions, Microsoft
Insurers are recognizing the value of having access to unlimited compute capacity for risk modeling and . . . making substantial cost savings with infrastructure related to the risk modeling workload.
models become more costly to build and run
Source: Thomson Reuters’ Regulatory Intelligence
Rising costs are a result of having to address more complex regulations. Technology, automation and AI have a central role. In this context, outsourcing and augmenting processes are becoming ever more important.
And all the while, you’ll need to keep taking care of both the hardware and the software that it’s running, as well as managing all the operational risk. Plus, while your staff may get to know the system, when they move on they take their expertise with them.
70%
55%
20%
With so much costly, inflexible IT to manage, your on-site infrastructure could be holding you back.
Rick Yuan Head of actuarial modeling and transformation, AIA Group
We needed to run a projection tens of thousands of times to come out with a range of possibilities. One solution was to purchase more hardware, but the obvious winner was move to the public cloud. The beauty is you can tap that capacity when you need it and switch it off when you’ve finished the calculation.
When it comes to compliance in capital markets, a niche approach to your technology may perform well enough in certain areas. But it can’t cover the total compliance continuum. AML, communications, trade surveillance, pre-and post-trade monitoring, Consolidated Audit Trail (CAT), recording and reporting – they all have their champions. But to truly mitigate the most risk at the lowest possible cost, without “lawyering-up,” you need a comprehensive pre-to-post-trade platform that incorporates the best of automation and expert services with the latest and deepest regulatory intelligence.
75%
Leaving infrastructure sitting idle for 75 percent of the time and charging you for the privilege.
5x more
computing power needed
57%
Source: Chartis market quadrant report on KYC_AML solutions 2020
The single largest component in high compliance expenses is human labor
technology
40%
labor costs
Private cloud
other
3%
The industry-wide cost of risk data aggregation and regulatory reporting operations and technology.
In 2020, unprecedented global circumstances have shown us all the benefits of hosted IT for business continuity and remote working. But beyond lockdown conditions, there are more reasons than ever to run your organization’s most powerful systems in the cloud.
Job number one is to identify the exposures across your compliance operations that add cost and risk.
30%
43%
Are you ready to join the highest flyers?
David Elliott Architecture manager for financial services, Amazon Web Services
For insurers, the question isn’t "if" (they will migrate existing applications to the cloud) – it’s how fast they can move and what are they going to move first?
Variable data scattered across the enterprise
What keeps you from seeing the complete picture?
Source: Chartis Research. Counting and Cutting the Cost of Compliance: How To Accurately Assess the Cost of Risk Data Aggregation And Regulatory Reporting. April 2018
$70b
Time-consuming, error-prone manual patchwork of systems
Experienced talent wasted on routine tasks
A global marketplace with variable currencies, languages, regional nuances and multiple jurisdictions
A hyper-connected social media environment that can easily and rapidly impact your reputation
Trade-day duress making haste and leading to waste
Achieving transparency and visibility into your compliance risk is paramount
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A connected RegTech ecosystem links the trade desk, middle and back offices for coordinated, optimized pre-to-post-trade regulatory compliance.
Managed cloud services give you the power and scalability of a sophisticated actuarial modeling and risk management platform, but reduce the challenges, costs and risks of provisioning infrastructure and managing the underlying IT.
Chief risk officer Major insurance company, UAE Cloud computing services come in three shapes
The accommodation of large data sets, highly demanding algorithms and the hardware for instant computational resources make the cloud ideal for large-scale data analysis.
To truly get a grip on the situation, firms must build a more connected RegTech ecosystem that connects the trade desk, middle office and back office. It must be capable of not only monitoring transactions in volume, but the underlying communications with global regulatory context, from pre to post-trade, as well. It’s a tall order, but it’s achievable if you start by clarifying the component parts and associating them with the relevant data. Then you can formulate a cohesive view of your regulatory landscape.
deliver speed and scale
save time
eliminate risk
What goes into a connected RegTech ecosystem?
Each piece of the puzzle plays an important role in constructing the bigger picture. As you survey your trade compliance life cycle – from transaction monitoring to identity management and control to reporting – consider the regulatory context at each stop and envision how each element might be integrated and contribute to the next phase in the cycle.
Picture a Connected RegTech Ecosystem
19%
Jonathan Silverman, director of insurance solutions, Microsoft
We've seen triple-digit rate growth yearon year in cloud adoption among insurers.
2017
2020
22%
18%
Hybrid cloud
41%
31%
Public cloud
key regtech pillars for trading compliance
Business Area
Transaction Monitoring
Identity Mgt & Control
Regulatory Reporting
Risk Management
Compliance Monitoring
Data Privacy
Accounting & Tax
Portfolio Management
Trading
Middle Office
Back Office
Data is less secure in the public cloud
As regulatory requirements increase in volume and complexity, banks have realized that they can’t just add headcount. For example, the Liquidity Coverage Ratio (LCR), Net Stable Funding Ratio (NSFR) and Interest Rate Risk in the Banking Book (IRRBB) require much more substantial levels of analytics than the ALM and Liquidity reports of a decade ago.
What could such an ecosystem look like?
Werner Matula, head of Actuarial Services, Vienna Insurance Group
The cloud was pretty new to us and the discussions wentdeep, from a data security and regulatory and legalpoint of view. At the end of the day, it was about thisspecific pocket of risk modeling. We do not work withpersonalized data and we don't move any of our clients’data to the cloud.
Obviously, no isolated solution can cover it all. But an integrated, unified platform can pull together all the essential ingredients and make them accessible across the organization.
myth 1
Concerns about the cloud often focus on the safety of data. But public cloud providers invest more in security every year than any insurer ever could. They also make sure that any personalized data is encrypted in the public cloud – although, of course, insurance risk management systems and actuarial calculations don’t actually use any personal data.
In many jurisdictions, there are laws that stop you moving data across borders. That’s not a problem for major public cloud providers, who make sure your data stays in one country by storing it in local data centers only.
The cloud doesn’t respect national borders
myth 2
If they shopped around, it’s likely that your own IT experts could find a good deal for hosting your risk management system in the cloud. But they won’t have the specialist expertise and experience to run, support, maintain and upgrade the risk management solution itself.
In-house IT teams could do it more cheaply
myth 3
trading compliance solutions: front to back
Pre-Trade
Post-Trade
Pre-Trade decisioning
Trade surveillance
Consolidated Audit Trail (CAT)
Trade and transaction reporting
Regulatory reporting
Anti Money Laundering (AML) Know Your Customer (KYC)
eComms surveillance
Six tips for a modernized and comprehensive ecosystem:
We always work with the latest versions (of our risk IT), only now we don’t need to exchange servers and hard drives all the time. The cloud provider will ensure they have the latest hardware. And the software provider takes care of ensuring the software is up to date, and makes sure we receive regular updates and that everything is optimized.
Keep things simple, secure and cost-effective
Hand over the provision of ring-fenced, secure infrastructure in the public cloud and the running, maintenance and security of your system to one technology provider – under a single contract and support arrangement and with strict service level agreements. And only ever pay for the infrastructure you use, switching it off between modeling runs.
React more quickly to business demands and handle peaks in workload duringreporting cycles. At the same time, you can improve governance by runningmultiple cloud environments in parallel for testing and production.
Get agile but stay in control
With your solution run and regularly upgraded by the people who know it best,you can free up your own resources for tasks that add value, and stay safe inthe knowledge you’re using the latest actuarial and cloud technology. You’ll alsooperate in the powerful cloud environment that best matches your model typesand workload patterns, continually reviewed and optimized for peak performance.
Leave complex IT to the experts
Work remotely from any location, however distributed your workforce,and easily add or remove users. Plus, you can rely on stringent businesscontinuity planning, whatever the crisis.
Flex to the unexpected
Pre-trade decisioning: Fully automate global regulations and market micro-structure, all within real-time trading systems, by intelligently merging finance and computational law.
Trade surveillance: Get visibility into potential compliance risk factors while increasing operational efficiency and regulatory transparency.
Consolidated Audit Trail: Ensure regulatory compliance and trade life cycle forensics solutions that cover CAT reporting requirements and serve as a central data repository for data pursuant to SEC Rule 613.
Trade and transaction reporting: Integrate partner offerings to ensure accurate and timely reports that enhance transparency, reduce risk and lower the cost of report preparation across the full range of regulatory regimes and repositories.
AML-KYC: Effectively identify and prioritize suspicious activity in real-time, while exposing the reasons behind each alert to reduce false positives and correctly identify suspicious cases.
Communications surveillance: Use natural language processing and AI to analyze the content and context of all communication types in one surveillance platform.
Our RegTech has you covered. We support all of the above and more.
FIS has more than
Clearly, the cost of non-compliance is high. That’s why you need to maximize your return on investment through an intelligent, comprehensive approach to compliance. FIS can help you mitigate future compliance risk and control costs with a coherent set of RegTech solutions and managed services that spans the trading compliance spectrum. With our cloud-based solutions and services, AI and automation, you can rapidly adapt to the latest requirements and create new efficiencies as you grow. Confidently meet your regulatory obligations with innovative RegTech from the world’s largest fintech provider – and leverage our decades of experience in building mission-critical technology.
Why compromise your insurance risk operations?
FIS delivers our leading modeling and risk management platform Prophet from the cloud through a range of hosted and managed services. With expertise in both the Prophet end-to-end suite and proactively managing applications in the cloud, actuarial and risk management teams can access the compute power they need, when they need it, while we handle system provisioning, maintenance, security and administration.
30,000
financial services customers.
Take the next step
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Contact Us
Capital markets firms continue to operate in an uncertain and demanding environment. The shift to remote working will stretch regulators in new ways while presenting firms with the opportunity to rethink their approach to risk and compliance. Advanced AI and machine learning, automation and outsourced risk services are all new advancements that help you manage your risk and compliance more effectively. Get the visibility you need across the enterprise with connected RegTech and risk services.
Let’s Solve Trading Compliance
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FIS is a leading provider of technology solutions for merchants, banks and capital markets firms globally. Our more than 55,000 people are dedicated to advancing the way the world pays, banks and invests by applying our scale, deep expertise and data-driven insights. We help our clients use technology in innovative ways to solve business-critical challenges and deliver superior experiences for their customers. Headquartered in Jacksonville, Florida, FIS is a Fortune 500® company and is a member of Standard & Poor’s 500® Index.
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