Towards a Standards-Based Technology Architecture for RegTech

Tom Butler ()
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Tom Butler: GRC Technology Centre, Postal: GRC Technology Centre, University College Cork, 13 South Mall, Cork City, Ireland, http://www.grctc.com

Journal of Financial Transformation, 2017, vol. 45, 49-59

Abstract: This paper highlights the need for industry and technology standards in the design, implementation, and use of RegTech. Without such standards, RegTech may fail to fulfil its promise of facilitating “smart regulation.” It is well-accepted that RegTech has the potential to help financial enterprises address the following issues: (1) solve the regulatory interpretation problem; (2) develop compliant governance and business policies; (3) make regulatory compliance reporting more efficient and effective; (4) help firms perform better data governance and analytics; (5)enable integrated risk management; and (6) automate controls across the business. Two significant problems challenge the potential of RegTech. The first of these is the “translation problem,” which affects not only the design and implementation of RegTech, but also how it will be employed to close the gap in regulatory interpretation and understanding. The second is the “Tower of Babel” problem, which refers to the absence of a “common language” in the financial services industry. This paper discusses how semantic standards can help solve potential problems with RegTech. Semantic technologies enable meaning to be attached to data – both structured and unstructured. RegTech solutions anchored on semantic standards can unpack regulatory requirements in complex and voluminous regulations. This will, we believe, require the use of standards-based regulatory and business ontologies. Semantic standards and technologies thus developed can enable RegTech solutions to help practitioners better navigate their digital labyrinths. Semantic technologies will, we believe, play a key role here, as without them the challenges arising from BCBS 239 cannot be addressed in a coherent, cohesive, and comprehensive manner.

Keywords: Financial Institutions and Services; Government Policy and Regulation; Standardization and Compatibility; Information and Internet Services; Computer Software; Data Collection and Data Estimation Methodology; Computer Programs (search for similar items in EconPapers)
JEL-codes: C80 G28 G29 L15 L86 (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:ris:jofitr:1591

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