Whether your organisation is a regulator or it operates in a regulated industry, you’ve probably heard about regulatory technology – also known as ‘RegTech’. And if you’ve dug deeper, you’ve likely discovered a lot of information about RegTech for the financial services industry – but very little about its other applications.
In this article, we’ll offer you a broader view of how RegTech can be used by regulators for the many regulated industries outside of finance. We’ll cover why RegTech is in demand, what it entails, and how it can help your government agency or organisation better navigate an increasingly challenging regulatory environment.
A growing regulatory burden
The number of regulations continue to grow across different industries. In Australia, the Institute of Public Affairs recorded 122,798 regulatory restrictions1
across the country in 2019, representing a 10% annual increase since they started tracking data in 1977. Since 2019, we’ve experienced the COVID-19 pandemic, an escalating climate emergency, and significant technological shifts, all of which will no doubt contribute to that growth.
While regulations are important in protecting community and business interests, they also have downsides. For regulators, the cost of administering regulation is high. There’s the need to adapt quickly to changing community and business needs. And in practice, it’s difficult to fully achieve regulatory objectives, which impacts levels of compliance and community outcomes.
Common challenges holding regulators back include:
- Constant changes to legislation and regulatory design.
- Difficulty in compiling data to identify trends and draw insights.
- A lack of timely, accurate information for reports and KPI tracking.
- Outdated and/or paper-based systems that don’t interact with each other.
- Time spent on inefficient, low value, repetitive processes.
- No single view of an organisation or person.
- Difficulty implementing risk-based regulatory approaches and targeting effort.
- Slow response times with no transparency around requests or applications.
- Limited tools available for activities in the field.
- Difficulties keeping an accurate and detailed audit trail.
For regulated entities, the cost of compliance can often be high. As regulations grow and evolve, the regulatory burden can become heavy with organisations struggling to keep up. The administrative burden can take valuable resources away from the core business and create so much red tape that it becomes an opportunity cost that takes away from revenue-generating work.
With regulations here to stay and set to continually evolve and change, both regulators and regulated entities need to get smarter about how they navigate regulation within their organisations.
Industrial relations: regulatory burden in action
In Australia, 2.2 million workers are paid under the awards system. There are currently 121 modern awards, each with numerous role classifications, rates of pay, allowances and penalty rates. The right technology can help businesses ensure they pay staff correctly and remain compliant with the multitude of legislation.
What is RegTech?
In response to increasing regulations and the challenges that come with them, new technological solutions have emerged known as RegTech, regulatory technology.
RegTech is technology designed to help organisations meet regulatory requirements more effectively and efficiently (Wang, 2019). It’s designed specifically to help organisations effectively navigate regulation by combining automation, intelligence and advanced analytics. RegTech can be used to manage the entire regulatory process and support transparency and consistency, while reducing the associated costs.
RegTech solutions may be particularly beneficial in areas where:
- Regulatory environments are particularly complex to navigate and monitor.
- There is scope to improve risk-based regulatory approaches.
- Technology can enable better monitoring and overcome constraints related to physical presence.
- Technology can safely unlock more uses of data for regulatory compliance.
For regulators, this means more effective approvals, compliance monitoring, and proportionate enforcement. For regulated entities, this means help in complying with regulatory requirements.
The Australian Productivity Commission has identified the ‘untapped potential’2 that RegTech has to offer. Due to a lack of awareness of innovations in RegTech and potential barriers to take-up, the Commission suggests regulators and industry might be missing a valuable opportunity to reduce costs and improve regulatory outcomes.
Beyond financial services – can your organisation benefit?
While the majority of RegTech solutions are designed for the financial services industry, regulatory technology solutions can and are regularly applied to other industries. Although awareness may not be strong2 yet, they are driving benefits for several sectors including:
- Justice and Peace
- Conservation and the environment
- Liquor and gambling
- Industrial relations
- Occupational licensing
- Primary industries
- Community services
- Work, health and safety
The benefits of RegTech
Regardless of your sector, there are common tasks and processes that come under regulatory frameworks. RegTech is specifically designed around these and is equipped to make the task of managing regulation easier. RegTech captures regulatory knowledge, is easily updated to keep pace with regulatory changes, and offers a user-friendly, cost-effective alternative to standard CRMs. With the right solution, your organisation can be flexible, responsive and better navigate an evolving regulatory environment.
Here’s how RegTech helps regulators:
- Automate processes – Automate highly manual tasks, workflows that align with legislation, and document generation.
- Make consistent, informed decisions – Risk-based algorithms and best practice workflows help establish consistent, transparent decision-making.
- Deliver a streamlined customer service – Bring teams together and seamlessly engage with the public with a single system to manage the entire regulatory process.
- Ensure compliance – Powerful search, reporting, analytics and audit capabilities enable better performance monitoring and compliance.
- Be an agile regulator – No code workflows make regulatory processes easy to change and update, helping close any gaps between legislative changes and workplaces.
Here's how RegTech helps regulated entities:
- Mitigate risk and ensure compliance – Comprehensive reporting with visual dashboards helps reduce errors and reporting delays, helping teams to mitigate risk and ensure compliance.
- Improve task and process management – Automated workflows help to consistently meet regulatory requirements while reducing costs and risks of non-compliance.
- Mobilise data collection – Enable staff to capture data in the field, helping to reduce time spent on manual data entry, rework, and administration.
- Empower staff – Information easily accessed in one system allows staff to access the information they need, when they need it, and help improve service delivery.
- Better respond and adapt to change – No code workflows help your organisation respond quickly to regulatory changes and remain compliant.
Designed for regulation
There’s no doubt that in an increasingly sophisticated regulatory environment, both regulators and industry will need to continue to monitor how they navigate change. With RegTech, they can adopt the right tools and processes to improve compliance and promote positive community outcomes.
To learn how Objective can help with your RegTech visit Objective Regworks.
1 The Growth of Regulation in Australia, Institute of Public Affairs, December 2019, page 2.
2 Regulatory Technology Information Paper, Productivity Commission, October 2020, page 5.