If Covid-19 has taught us anything, it’s that we need to be prepared, even for the unthinkable. As technology further shapes financial services (some may say how it currently stands was unthinkable some years ago), it’s one area where we can prepare, while adapting to managing risks before they happen.
The secret to achieving this will require different skillsets.
The economic recovery ahead is a separate situation, which may also turn financial services on its head, at least for a while, but the world keeps turning and technology will continue to innovate. The role of the compliance officer in the future doesn’t necessarily incorporate skills we’re using the most today (and certainly some of the skills of yesteryear), so it’s important to think – and act – ahead. But there are challenges to overcome.
Report reveals the real hurdles
The recent fourth Reuters Fintech, Regtech and the Role of Compliance in 2020 report revealed that changes are needed, highlighting the shifting role of the regulator and concerns around the best (or better) ways to deal with rising cyber risk.
Acquiring the necessary skills essential to making the most of technological solutions creates a deeper challenge, according to the report (and one that is facing regulators and policymakers alike to be able to keep a watchful eye over technology in financial services accordingly).
Within the report, a separate survey is mentioned, conducted by the International Monetary Fund revealing that 92.5% of 40 developing jurisdictions surveyed, were facing skills shortages in cyber-security regulation and supervision. This confirms that upskilling is needed by regulators, particularly to enable them to continue with their consumer protection & market stabilisation mandate in the digital age.
Opaque is a mistake
Clear rules and regulations will make it easier for everyone. South Africa’s cryptocurrency regulations are a case in point. Industry’s response called for more clarity, but arguably the way we will embrace the 4IR in financial services compliance overall, is uncharted territory. The regulatory authorities are understandably nervous of these muddy waters and the old adage of “fools rush in” comes to mind. We have a long way to go and coronavirus has disrupted life as we knew it).
Cryptocurrency regulations are important to some but there are far bigger and more important fish for the regulator to fry right now, including key regulatory initiatives and legislation like RDR and COFI.
Casting a thought back to earlier days (just before March 2020’s lock down in South Africa began), limited clarity on the rules (or what might be or won’t be possible) caused panic and fear. The new territory that comes with increased technology (and the fact that it urgently needs protection and regulation to govern it), is something we can’t ignore. Technology continues to disrupt every arena of our everyday lives, and so we must embrace it to thrive. But we also shouldn’t panic as it unfolds.
Where to next?
Reuters’ report called for incentives from industry bodies, in support of innovation. Without question, support extends what is possible, which could be to everyone’s benefit. Our local regulators have jumped on board to create a “protected sandbox” environment where innovators can develop and “test fire” next generation solutions, within close sight of the authorities. The newly launched Intergovernmental Fintech Working Group (IFWG) Innovation Hub (launched in early April) also aims to promote responsible innovation in the South African financial services sector. The Hub seeks to respond to the changes that are driven by Fintech.
Compliance will undoubtedly re-tool and re-skill in times to come as Fintech, RegTech, SupTech, and the like continue to develop. But best not to hang around waiting for regulation to take true form before you make a move; it’s better to stretch technological capabilities as best you can, and as soon as possible.
The new world is here, and we should remember what tends to happen to the slowest runner in the herd.