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New concepts for the wealth management industry – why working with regulatory challenges needs to be modernised (and how to do it)

Thomas Schäubli, Head of Marketing at Apiax, looks at why and how compliance work needs to be modernised

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Apiax for Wealth Managers

A growing number of regulations discourage financial institutions from doing business globally and increase costs and risks for ambitious wealth managers. Apiax provides answers to wealth managers' most pressing regulatory questions, enabling them to realise more business opportunities, while keeping costs low and risks under control.

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by Apiax
| 23/11/2020 12:53:18

In a recent survey conducted by Apiax, nearly two-thirds of respondents said they did not expect their compliance budgets to increase and their compliance teams to grow over the next twelve months - despite the fact that they see increasing regulatory uncertainties

Understandably, nearly 60 percent said they were looking for ways to improve the efficiency of their compliance departments. The focus of this article is to show why and how compliance work at wealth managers needs to be modernised.

The recipes proposed by international RegTech start-ups are clear: financial service providers will be able to put their customers back at the centre of their activities if they succeed in making regulatory knowledge easily accessible to as many of their employees as possible.

But how does the financial industry deal with the flood of regulations today? Many financial service providers still rely on centimetre-thick manuals that often do not provide precise answers, and on training based on endless hypothetical scenarios that cannot always be found in reality - an approach that no one can really afford in a world of increasing competitive pressure and shrinking margins.

Here’s our approach to creating the future of compliance. We think that what is needed today is an approach to translate complex regulatory requirements into machine-readable regulatory rules that are then accessible to everyone.

The RegTech sector has many niches, from regulatory change management to trade compliance or KYC. What makes Apiax unique is that it does not focus on a single regulatory topic or process, but rather on creating the tools and toys to translate complex regulatory requirements into machine-readable regulatory rules and make these rules accessible to everyone via user-friendly interfaces.

With Apiax, the effort of interpreting often vaguely formulated laws and the policies based on them is not eliminated, but is no longer performed by the customer-oriented employees of a financial institution. Instead, it is done by a team of compliance experts, either in-house or external, who translate their knowledge into a format that is much more transparent and accessible.

This not only saves valuable time, but also reduces the risk of conscious or unconscious misconduct. At the same time, violations can be made directly visible to those responsible. In the future, it will be common practice for members of the executive team and the board of directors to keep up to date and informed via a cockpit. Any measures can then be initiated more promptly than today.

Our mission is to translate complex regulatory requirements into binary (yes/no) and thus directly applicable, reliable answers. At least for recurring questions, such as those frequently encountered in the financial industry, solutions already exist. Topic by topic and with the help of a powerful ecosystem, our regulatory experts are structuring the most pressing regulatory issues plaguing the financial industry today. We are currently focusing on a few key issues, but our goal is to provide answers to all major regulatory questions in the industry in the not too distant future.

Let’s look at some concrete examples. In investment advisory, it is crucial to understand which services and instruments can be made available to which clients, especially in a crossborder context. At Apiax, we collect all regulatory information needed to answer these questions, such as the client’s nationality, the client’s place of residence, and many others. We do this for all countries involved, define rules for the aggregation of this information and are then able to give a yes or no answer for the provision of a specific service or instrument in a specific customer interaction.

For those who need to access this information, we provide a multi-level user interface that they simply walk through, or, for engineering teams, an API to link our knowledge to their existing tool landscape.

Figure 1: Apiax Platform - transform written regulations into digital compliance rules

The impact this has on our customers is far-reaching. On the business side, we are seeing a significant reduction in meeting preparation time, while we are seeing an even more significant increase in process efficiency. With the compliance experts, we see that they are suddenly relieved of repetitive questions and finally find time again to focus on strategic issues. We see them turn into compliance coaches, as they finally have time again for personal consultation. And finally, we see that engineering teams can significantly reduce the time they need to add legal and compliance audits to their tools.

The bank of tomorrow will be only be able to cope with increasing regulatory complexity by adopting new approaches. RegTech start-ups are working feverishly on what exactly these solutions will look like. At Apiax, we believe that the true value of RegTech is not in digitising specific tasks or processes, but in providing a way to digitise regulatory knowledge and make it easily accessible to everyone within the business.

Click here to access the full UK WealthTech Landscape Report 2020.