4 minute read
Trends and challenges in regulation and compliance
Wael Salem, Chief Executive Officer, Tradesocio, details the coming changes, trends and requirements of regulation and compliance.
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Given the increasing adoption of technology in the wake of the COVID19 pandemic outbreak, where is technology playing a significant role in compliancerisk management currently?
Artificial intelligence is the technology used for compliance automation. These software provides organizations with workflow capabilities related to compliance, including self-assessments, control analyses, corrective action planning and controls testing. By automating these processes, compliance automation replaces traditional paperbased compliance checks and manual reviews, allowing fully digital onboarding.
Tools that monitor compliance start by receiving an organization’s security policies. Any regulations that involve a company’s industry, configurations, accounts, inventories, and security m e a s u re s a re c o p i e d i n t o t h e compliance automation software to detect violations. This knowledgebase of compliance regulations and security standards can be changed or updated at any time.
As an organization, what are some of the most advanced i n n ova t i ve a p p ro a c h e s t o compliance risk management you have implemented?
Our solutions are integrated with a powerful ERP solution that allows management of internal business processes, such as sales, retention, support, accounting, finance, and compliance. We provide the flexibility to accept and validate different types of documentation. Our digital KYC and compliance checking solutions have the ability to onboard more than 90% of new customers.
What trends do you see among financial institutions in the MENA region and how do you compare them to other parts of the world?
There is a race towards digital solutions and an increasing competition amongst financial institutions in the GCC. Financial institutions are considering partnerships with fintech companies to deliver relevant flexible solutions that adapt to market products, compliance and regulatory changes. Paperless transactions mean there is an increasing trend in secured and automated onboarding of new clients. We are also seeing more onestop service providers that offer multiple services from one platform, services such as money exchange, investments, and portfolio management, while the increased use of AI and ML is helping with costs and risk management. In short, there is a race towards digital for scale, cost-efficiencies and user experience optimisation.
More fintechs are emerging across the region and competition from the digitised non-traditional financial companies are coming to the fore. The potential for competition from Big Tech entering the financial sector is also driving financial institutions to upscale their digital technologies to survive and be competitive. Moreover, with the work-fromhome environment, wealth management providers also need to empower their
Wael Salem, Chief Executive Officer, Tradesocio
wealth managers with the right digital infrastructure. Legacy financial advisors and managers must also embrace digitalisation and need to expand their remit to the segments below HNWIs and offer more financial inclusiveness.
What type of ongoing monitoring and auditing processes have you put in place to assess the effectiveness of your compliance programs?
We partner with our clients, effectively an extension of their technology teams. We work with them very closely, often on a day-to-day basis, to help them make most of our solutions. We track, analyse, and run our services in an efficient semi-automated manner. We offer the complete end-to-end financial
management solution, from development, hosting and maintenance, to security and post-sales technical support.
Laws and regulatory requirements are updated continuously, verifying compliance requirements, managing third-party risks and catching potential weaknesses. This reduces the likelihood of encountering compliance fines or breaches and minimizes the number of inadequate or inaccurate reporting mistakes.
What do you see as the greatest challenges for the financial services industry in enforcing compliance?
One of the major issues is the lack of trust financial institutions have in embracing fintech solutions. Traditionally, compliance is carried out post transaction, when it should be a requirement before the execution of the transaction.
Another issue is defining compliance ruleset according to the customer segment. For example, of a customer does not want to invest in certain industries or countries such as oil or Russia—the ruleset needs to be multi-tiered.
There is also a dearth in the skillset required in compliance risk management, making the changing legal requirements, trade, country, individual sanctions a more difficult landscape to grasp.
How do you envision financial regulation and compliance in the future?
The increased adoption of digital customer onboarding will come under regulatory bodies scrutiny and there will be more red tape surrounding it— additional compliance information will soon become a requirement. However, with the increase adoption of digital onboarding solutions, the digital acceptance and approval of submitted documentation will increasingly become the norm. The potential of additional regulatory reporting rules and guidelines could also be issued. I also expect to see a more widespread use of AI and biometrics identification and verification.
