RegTech is the use by financial firms of new IT to fulfil their regulatory duties or, in Deloitte's words, IT that seeks to provide "nimble, configurable, easy to integrate, reliable, secure and cost-effective" regulatory software. A new report has shed light on its adoption all over the world.

The report by Thomson Reuters is entitled Fintech, RegTech and the role of compliance in 2020. It contains data from the fourth survey that the firm has carried out on the subject. This year’s results represent the views and experiences of almost 400 compliance and risk practitioners worldwide.

One challenge for firms is the need to acquire the people with the right skills so as to reap various IT-related benefits. Equally, regulators ought to have the appropriate skillsets to oversee the use of IT at financial firms. Firms themselves, and G-SIFIs (global systemically-important financial institutions) in particular, have made substantial investments in skills and the upgrading of old systems.

Key findings

The involvement of risk and compliance functions in their firm’s approach to FinTech, RegTech and InsurTech (insurance technology) continues to evolve. Some 65% of firms said that their risk and compliance functions were either "fully engaged and consulted" or had some involvement (up from 59% in the previous year). In the G-SIFI population 69% reported at least some involvement with those reporting their compliance function as being "fully engaged and consulted" - almost doubling from 13% in 2018 to 25% in 2019.

Boards have been involving themselves more and more in their firms' approaches to FinTech, RegTech and InsurTech, with 62% of firms reporting that their boards were involved to some extent - up from 54% in the previous year. For G-SIFIs the figure was 85% - up from 56% the year before. 37% of G-SIFIs reported that their boards were "fully engaged with and consulted" on their approaches to FinTech, RegTech and InsurTech - up from 13%.

Opinion on technological innovation and digital disruption has fluctuated in the past couple of years. On the whole, people are more positive about FinTech-related innovation and digital disruption, after a slight dip in 2018. There are regional variations, with the UK and Europe reporting a 97% positive view at one end going down to a 75% positive view in the United States.

There has been a similar ebb and flow of opinion about RegTech-related innovation and digital disruption although at lower levels. A total of 77% reported either an extremely or mostly positive view about this - up from 71% in the previous year. For G-SIFIs 81% had a positive view, up from 76% in the prior year.

Overall, 10% of firms said that they had been investing in specialist skills for members of their boards and 16% had been investing in specialist skills for their risk and compliance functions. 26% have yet to invest in specialist skills for their risk and compliance functions but they know that they need to (32% know this regarding board-level specialist skills).