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Todd Moyer is executive vice president, global head of business development at Confluence.

What will 2017 be known as?

The coming year will be known as the year of RegTech. A subset of FinTech, RegTech facilitates the delivery of regulatory requirements faster and more cost-effectively than existing capabilities. Regulatory bodies, such as the Financial Conduct Authority, are pushing the term and encouraging the development of RegTech solutions.

Firms have struggled to meet regulatory reporting mandates for a long time—in particular, the condensed reporting timeframes have been a significant challenge. With the rise of RegTech, the industry is beginning to look at challenges differently and is beginning to realize that the goal of automation in the back office is possible. Moving forward, sound data management models will increasingly be seen as a way to improve business operating models, lower risk and drive cost efficiency. We expect that there will be a huge opportunity for service providers to develop solutions and fulfill the promise so many firms are expecting from the growth of RegTech.

 

What changes do you expect to see in regards to financial technology in 2017?

Since the economic crisis, regulators have shifted their focus to identifying and managing systemic risk in the market. Many recent regulations—Form N-MFP, Money Market Stress Testing, Form CPO-PQR, Form PF, AIFMD and this year’s SEC Modernization rule—are designed to give regulators deeper visibility into systemic risk. These regulatory mandates have made ineffective data management and lack of automation no longer viable.

Firms generally understand that automation makes sense and that they should be pushing for it, but automating systems is hard to do. Many do not have the time or budget to keep up with the flood of new regulatory mandates. The rise of RegTech in 2017 will be the tipping point that drives firms to automate.

Additionally, we expect there to be a huge business opportunity for third-party service providers because of how difficult it is for asset managers to handle these data management challenges. We also expect that the firms that actively embrace RegTech to solve regulatory challenges and to improve their overall business operating models will be better positioned for success moving forward, while firms that do not take the long-term view of where technology is leading our industry will increasingly struggle.