Can regulation technology address the compliance woes of banks?

livemint.com:

The compliance function in banks is the nerve-centre that performs a vital role in preserving organizational resilience and stability. Equate it to our cardiovascular system. Just as a weak heart can debilitate the body, even result in a sudden demise, so can inept and deficient compliance take a toll on a bank’s health, with serious implications for the entity as well as the financial sector.

The case of Paytm Payments Bank is one such poignant reminder of this effect. Robust compliance within banks is not only a must, it should cover nearly all aspects of operations. It is both multifaceted and increasingly demanding.

Regulatory expectations of banks went up sharply after the 2008 Global Financial Crisis, the lessons of which inspired reforms spanning the entire spectrum of prudential guidelines, covering both idiosyncratic and systemic risks, with many new variables placed under watch, such as the liquidity coverage ratio, net stable funding ratio, non-risk-based backstop facility or leverage ratio, and too-big-to-fail criteria. The focus on governance, conduct, risk management and supervisory scrutiny has intensified in response to evolving financial dynamics and the disruptive impact of fintech on banking, payments and digital channels.. The ‘assurance’ function, encompassing risk management, compliance and internal audit/inspection, has gained in importance at banks.