How RegTech is improving risk, compliance, governance and supervisory services for super funds

1. How RegTech is improving risk, compliance,
governance and supervisory services for super funds
Stephen Huppert
IBRC 2017 @stephenhuppert

2. I’m a superannuation fund trustee/exec,
why should I care about RegTech?

3. What do you think will be the single biggest risk to your business in
2025?
Do you think there will be more or less regulation in a decade?
Source: BNP Paribas Securities Services and Australian Institute of Superannuation Trustees as at February 2015
Regulatory change

4. “A staggering 66 reports, reviews and inquiries
have impacted the superannuation industry in
the past 13 years”
Ian Silk, AustralianSuper CEO, April 2015

5. “58% of funds regard government regulation and the Productivity Commission inquiry
as their fund’s top risk. Funds are finding regulatory change overwhelming, fast and
too frequent for their liking.” - Mercer 2020 Report
“Many of the institutions we reviewed did not ensure internal processes consistently
supported the value of ‘doing what is right’ for the customer. Many of the failings we
identified led, or had the potential to lead, to poor outcomes for customers.” - ASIC
Report 515
“Conduct risk...can be caused by deliberate actions or may be inadvertent, caused by
inadequacies in practices, frameworks or education programs. Conduct risk can have
significant ramifications for an organisation, its shareholders, clients, customers,
counter-parties and the financial services industry.” - ASIC Market Supervision Update

7. Source: Deloitte Inside magazine 2017 | The RegTech universe on the rise

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20/9/15 20/9/16 20/9/17
RegTech
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RegTech v FinTech
Interest over time
Google Trends: RegTech versus FinTech

9. Some of the problems RegTech
businesses are addressing include:
• identity verification
• fraud prevention through transaction
analysis
• trade tracking and analysis
• anti-money laundering
• know your customer compliance
• monitoring culture through people
analytics
We are also seeing RegTech
developments in the following areas:
• automation of previously manual
processes
• collection of standardised compliance
data in real time
• analysis of large data sets for
compliance risk and monitoring
• automatic generation of reports
Regtech has enormous potential to help organisations build a culture of
compliance, identify learning opportunities and save time and money relating to
regulatory matters. ASIC Innovation Hub

10. Evolution of RegTech
1
Phase 1: Manual
Manual data capture based on cycle times
2
Phase 2: Workflow automation
Compliance software establishes consistent workflow
3
Phase 3: Continuous monitoring
Applying data science to automate the back office
4
Phase 4: Predictive anaytics
AI and machine learning are proactively identifying and predicting risk

11. Cost efficiency
Availability
Flexibility
Security
Analytics
RegTech Benefits

13. Who is doing RegTech and
how can I work with them?

16. Platform As-A-Service Capability Sharing
Common models of the new breed of process externalisation providers
Process externalisation
Enabled by technological advancements, external service providers are
growing and building a track record of success in driving efficiency.

17. What else can RegTech do for me,
are there any risks I need to know about?

18. “Artificial intelligence can help people make faster, better, and
cheaper decisions. But you have to be willing to collaborate with the
machine, and not just treat it as either a servant or an overlord.”
Anand Rao PwC Innovation Lead, Analytics

22. Okay – what should I do next?

24. Where to start with RegTech
Assess current state
Understand your options
Identify immediate wins
Assess and address additional risk factors

26. In the short term, RegTech will help firms to
automate the more mundane compliance tasks
and reduce operational risks associated with
meeting compliance and reporting obligations.
In the longer term, it will empower compliance
functions to make informed risk choices based on
data provided insight about the compliance risks
it faces and how it mitigates and manages those
risks.

27. Stephen Huppert
@stephenhuppert