Getting started with RegTech

As financial services firms look for ways to harness the power of risk & regulatory technologies (RegTech), one of the first questions that comes to mind is where to start. Different parts of the business present very different challenges and opportunities, and the activity areas you choose to focus on can have a big impact on the results. Here are some tips for getting started:

Target labor-intensive processes for RPA
Robotic process automation (RPA) can dramatically reduce the time and effort required to execute routine tasks that involve a lot of repetition and manual processing, so consider looking for those kinds of tasks is an effective way to begin your search. At many firms, one prime area for automation is Anti-Money laundering (AML), which often involves routine analysis of large volumes of transactions. AML activities particularly well-suited for automation include monitoring transactions; conducting know-your-client (KYC) reviews; and preparing filings for suspicious activity reporting (SAR).

Another key area for automation is risk and compliance management. High impact activities well-suited for automation in this area include assessing and sensing risks; predicting risks and regulatory changes; monitoring and testing compliance (including analysis of documents and voice files); and measurement & reporting.

If your firm already has a high degree of automation in these areas, you can pat yourself on the back and move on to other parts of the business. However, at many firms, both of these areas are still very labor-intensive and can greatly benefit from RPA, which has the potential to deliver major improvements in both efficiency and quality.

Look for mountains of data hiding valuable insights
Advanced digital technologies such as natural language processing (NLP) and machine learning (ML) can scan through vast amounts of data, uncovering hidden insights that would be difficult or impossible to find through traditional manual methods. For example, NLP is used in legal discovery processes to rapidly review millions of documents and quickly and efficiently eliminate the vast majority of documents that are not relevant to the legal matter in question. Machine learning can be very effective in predicting which mortgage loan applications are likely to be low-risk, significantly reducing the need for inefficient manual review of such loans.

To identify these kinds of opportunities, look for large pockets of untapped data within your business and operations, and then ask yourself what valuable insights you might find in that data if you had a magic wand that could make them appear out of thin air – because that’s essentially what NLP and ML can do.

For many firms, risk management is an area that can greatly benefit from NLP. For example, NLP can be used to determine risks hidden in textual descriptions of documents that are not fully transcribed into databases (e.g., text in insurance documents).

Think in parallel
Compared to RPA, NLP and ML are further up the technology curve. What’s more, there are a variety of emerging cognitive technologies even more sophisticated than NLP that use artificial intelligence to supplement or potentially even replace the knowledge and judgment of human experts. However, that doesn’t mean you have to master RPA before implementing more advanced technologies. Rather, the RegTech solutions you apply in your business depend entirely on the problems you need to address – and in many cases the best approach is to simultaneously consider a variety of technologies that address a wide range of opportunities.

This might mean, for example, using RPA to deal with purely manual operations such as conducting reconciliations between different mortgage datasets, while at the same time using NLP to extract analytics data from mortgage loan and income documents, and perhaps even using ML to combine those two datasets in order to generate new insights that can classify mortgage customers by profitability or risk.

Given how quickly RegTech is evolving, the potential applications and benefits are truly limitless – so it’s important to be open to new capabilities and opportunities. That being said, when starting out it is also important to focus on the here and now – using RegTech to address immediate problems and improvement opportunities that can deliver tangible results quickly. This can help build credibility, momentum, and excitement about RegTech at every level of the organization.


Dilip Krishna
Managing Director | Deloitte Risk and Financial Advisory
Deloitte & Touche LLP

This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor.

Deloitte shall not be responsible for any loss sustained by any person who relies on this publication.

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