The REGTECH Book

The ROI of RegTech

By Brad Maclean

CEO, Regulation Asia

Technology continues to disrupt all manner of knowledge work, and regulation is no exception. Regulations and compliance continue to be a massive headache for financial institutions, regardless of size. They are not only costly but the costs and risk of non-compliance, even weak compliance, are astronomical. During 2015, in the US alone, financial institutions paid more than $160 billion in fines for non-compliance.

From this perspective, the potential of RegTech is massive – from improving compliance, efficiency and effectiveness, to a potential paradigm shift in their very natures. The change could be so substantial that it could transform the role of compliance from a necessary evil to a strategic opportunity. It can empower companies to improve behaviours for better compliance, lessen regulatory burdens, and build on relationships between different parts of their businesses and the compliance function. Ultimately, RegTech can give companies the knowledge and confidence to execute their business models while supporting a safe and sound global financial system.

Few would disagree that RegTech is still at a nascent stage, with only a handful of documented case studies to demonstrate its return on investment (ROI). In most situations, ROI will be difficult to calculate for a RegTech solution, and decision-makers will need to bear several principles in mind when evaluating a potential product:

• Cost baselining: Understanding ...