Digital capabilities are playing an increasingly large role in financial services operations, able to increase efficiency, improve customer experience, and reduce strain on staff. However, asset management and securities companies often struggle to get to grips with new, more stringent regulations while continuing to deliver value for their clients. This leads to a need to improve on their processes to ensure that they stay compliant.

To help tackle this issue, Reply Luxembourg collaborates with financial companies and recommends the best solutions in line with their existing infrastructure and processes.

Defining your transformation approach

According to Hugo Larguinho Brás, Partner at , establishing a model for regulation management, while ensuring that any risk is minimised, in a short space of time, is a prominent challenge for asset and securities managers.

“All companies have some specificities, and so it’s difficult for them to navigate amongst the various offers that we see on the RegTech market,” he explained.

“It requires some time and analysis to make the right choices to define the future model. So, if some of our clients need to quickly correct pitfalls immediately to show the regulator that they are treating the case, then it doesn’t leave much time to define the ideal model.”

When advising relevant executives on how best to go about this step, Hugo Larguinho Brás recommends the following actions:

·   Anticipate regulatory evolutions as much as possible. “Adapting to new regulatory obligations with tight deadlines forces you to do the minimum viable to comply, undermining your capacity to create value.”

·   Raise concerns up to the highest level possible in the organisation: “Most needs regarding data will be shared by other entities throughout the company, so a common solution might need to be implemented across all departments, which helps strengthening the sponsoring and sharing costs.”

·   Ensure that the transformation is agile: “Once the strategy is decided, and as you go through your initiative, you may discover new opportunities to create value that you hadn’t thought of before. So, you need to remain able to address any required changes on the journey. By achieving this, the target can evolve as you transform.”

·   Have the right business and IT experts: “It’s important to combine the right level of subject matter experts, who know your processes and the regulations, with the right technologists, who know the technology that you will deploy. Having the buy-in and involvement of all internal departments (Compliance/Risk, Business, Operations and IT) is also essential.”

·   Ensure proper data quality: “It is often a challenge to capture all the data required by a regulatory process, and much of that data is not clean because it has not been checked or updated for a long time. Many regulatory initiatives require a data cleaning first.”

RegTech capabilities driving value today

Two main types of RegTech capabilities are helping financial service institutions stay compliant: software that encompasses the whole system — for example a full client onboarding cycle — and software that manages a particular process, such as reporting or document management.

Hugo Larguinho Brás explains: “The technologies that handle the whole process from A to Z are typically heavier to deploy, but they will allow you to cover most of your needs. These are also more expensive and often more difficult to adapt in line with a company’s specificities.”

“Meanwhile, those technologies that treat part of the process can be combined with other technologies. While this brings more agility, combining several tools can also turn your target model more complex to run.”

“We see more and more cloud and on-premises solutions available to asset management and securities companies, from software-as-a-service (SaaS) and platform-as-a-service (PaaS) deployed in-house, to solutions combined to outsourced capabilities. Recently, artificial intelligence (AI) and machine learning (ML) have entered the RegTech space, adding further intuition in line with demands while continuing to evolve.

While variety is always healthy no matter the market, it’s vital that companies make the right choices. One misstep can bring down all your strategy.”

The benefits of a services partner

Reply Luxembourg distinguishes itself from competing consulting service providers by bringing together expertise from an array of disciplines, owing to Reply Group’s collaborative approach across subsidiaries. With company needs, and those of their respective clients, continuing to evolve, having insight on hand for whenever it’s needed is paramount to delivering value.

“We have the right mix of subject matter experts, people who understand the regulations, the concrete operations and the technological expertise.” said Hugo Larguinho Brás.

“As part of Reply, a big IT consulting group, we have this capacity to help our customers access any tool available on the market in terms of functionalities, deployment complexity, scalability and maturity. This is our differentiator.”

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