Regtech approach and next steps

ASIC’s general approach to regtech

ASIC established its Innovation Hub in March 2015 to help financial technology (fintech) and regtech businesses navigate Australia’s regulatory system in the financial services sector without compromising investor and financial consumer trust and confidence. In so doing, the Innovation Hub streamlines ASIC’s engagement with the fintech and regtech sectors and removes red tape where possible.

ASIC considers that the regtech sector has enormous potential to help organisations build a culture of compliance, identify learning opportunities, and save time and money relating to regulatory matters. ASIC notes that in some use cases regtech has already been making a valuable contribution in promoting regulatory compliance across consumer and market integrity outcomes (e.g. monitoring of trading and regulatory reporting).

Since its inception, the Innovation Hub have met with over 150 regtech entities, more than 60 of which received informal assistance to better understand their business models and regtech development within the sector more widely. As part of this work, ASIC engaged in close collaboration and knowledge-sharing with domestic and international regulators.

In May 2017, ASIC released Report 523: ASIC’s Innovation Hub and our approach to regulatory technology on its current and future approach to regtech. In response, in part, to feedback received on the approach in the report, ASIC has taken a leading role in promoting networking and collaboration in the regtech sector.

ASIC’s approach to regtech is guided by a set of basic principles that include:

• working towards outcomes in regtech that align with our strategic priorities and approach to innovation
• undertaking a number of focused initiatives that will deliver outcomes in the near term
• learning from industry input, good international case studies and our own experience from engaging with the regtech sector. 

As part of ASIC’s approach to regtech, and in response to the 2017 consultation, ASIC convenes quarterly Regtech Liaison Forums to promote networking, collaboration and information-sharing. To date, ASIC has hosted eight national forums with attendance of approximately 250 people per session. The Australian Prudential Regulation Authority, the Australia Transaction Reports, and Analysis Centre (AUSTRAC), the RegTech Association and FinTech Australia regularly provide insights into their regtech initiatives and the state of the sector at these forums.

Regtech initiatives in FY2019–20

ASIC intends to implement further regtech initiatives during the remainder of
FY2019–20. The design and planned implementation of these further initiatives have been informed by the initiatives undertaken during FY2018–19. ASIC is planning initiatives on the following topics in FY2019–20:

• Machine learning monitoring of responsible lending obligations by credit providers
  A public problem-solving showcase event.
• Digital record-keeping of financial services
  A landscape report to look at current and potential future practices for financial services providers’ digital record keeping.
• Structured financial information of public companies
  A showcase to illustrate the relative ease of producing structured financial information reports of public companies and the benefits to users.
• Licensing Guidance TAG tool (Phase 2)
  To undertake internal (and potentially some external) testing of the prototype licensing guidance chatbot provided to ASIC as a result of the trial conducted in FY 2018–19 (see Regtech Licensing TAG tool). Phase 2 would inform future decision-making on whether to put such a tool into production.

ASIC is also considering other regtech initiatives in FY2019–20 depending on available resources and managing competing demands on scheduling of the regtech initiatives.

Beyond 2020

ASIC will consider a range of ideas for continuing to promote regtech beyond FY2019–20. The scope and nature of what ASIC can do will depend on an assessment of the regtech initiatives during the remainder of FY2019–20 and available ongoing resources. Some of the initiatives ASIC may consider include:

• leading the narrative on the application of regtech
• hosting further regtech showcase events and playing a larger role as observer to regtech trials by firms
• providing more guidance on good practices on engaging, implementing and maintaining regtech, including applying AI and ML
• leading the way through ASIC’s own adoption of regtech in its supervisory work.

Industry-led initiatives

ASIC strongly encourages the financial services industry and related stakeholders to take more of a lead in developing the regtech sector. Some ideas industry may wish to consider include:

• enhanced channels for general information sharing on regtech between firms, regtech firms, and regulators
• standards on digital record keeping of financial service provision and regtech procurement practices
• minimum terms and expectations to be used by stakeholders in conducting regtech trials.

 

For more information about ASIC's regtech series, follow the links below:

• ASIC regtech initiative series 2018-19
  • Results and primary observations
  • Monitoring Financial Promotions Demonstration and Symposium
  • Financial Advice Files Demonstration and Symposium
  • Life Insurance Sales Calls Voice Analytics and Voice-to-Text Trial and Symposium
  • Regtech Licensing Technology-Assisted Guidance Tool Trial
  • Regtech approach and next steps