Can relatively conservative regulatory bodies truly embrace and benefit from advanced technologies?
The truth is that the meeting of high tech and regulatory compliance is inevitable and those who recognize this potential are those who will be leading regulation into the 21st century.
Top Swiss regulatory professionals will be presenting along with demonstrations of Artificial Intelligence (AI) and other technology solutions from Switzerland, Israel and the UK, showcasing how technology is improving efficiency and accuracy in regulatory compliance today and in the future.
One of the main challenges for the regulatory community is “mindset”. It is not simple to take an industry based on strict well-defined rules and regulations and demand integration with technologies born of high-risk venture capital and pioneering entrepreneurs. While AI might seem like science fiction to some, the truth is that many cutting-edge technologies have developed to the point where they are now suitable for regulatory and compliance applications.
Regulation may be conservative by nature, but it is important to realize that compliance in today’s world requires innovation. As a leader in the financial sector, Switzerland is already known as a country that plays by the rules and can be relied upon to preserve well-defined systems and processes.
That precision can be significantly enhanced by embracing innovation and the benefits that it can bring in terms of efficiency, improved compliance and cost savings. This is what makes Zurich an excellent candidate to lead the world in implementation of the latest applications in the worlds of finance, insurance and – of course – regulation.
Swiss “brand recognition” as a trusted partner and confidant in the financial world has been somewhat eroded by international enforcement of transparency laws which basically put most banks in North America and Europe on equal footing. It is now nearly impossible for one bank to have more confidentiality regarding the transactions of its customers than the next.
Switzerland needs to and is in the process of, defining new ways to leverage their expertise and reputation for stability in a volatile world into new sectors. Technologies associated with the financial industry, better known as Fintech, are a great example of how this is happening on the ground.
The unique combination of the world’s highest salaries, lowest unemployment and high standard-of-living causes little urgency for fast-moving innovation. The good news is that this attitude is changing and the awareness is growing. That means the time is right for Swiss companies to proactively harness innovation in order to keep traditional industries such as finance and insurance, competitive in the global marketplace.
Similar to the financial expertise that makes Zurich a hub for Fintech, the encouragement of automation by regulatory bodies and development of non-evasive compliance procedures represents a space where Switzerland can be a world leader in RegTech. Interestingly, the regulation of financial institutions is at least one area where FinTech and RegTech enjoy a true win-win relationship. The Basel III capital requirements, international anti-money laundering laws, anti-tax evasion initiatives and enhanced customer protection rules are costing banks a significant amount of time and money.
Complying with these tougher financial regulations is costly with most of the expenses going to human resources. As a response, a number of Swiss start-ups have developed solutions to find suspicious customers, detect cyber fraud and check credit histories. This is a great real-life example of how technological innovation is enabling better regulatory control while lowering the cost of compliance and its impact on business operations.
Crypto Valley Switzerland
Another interesting meeting point of FinTech and RegTech is crypto currency. The area between Zurich and Zug is the home to many Swiss high tech startups and is currently being promoted as “Crypto Valley” to emphasize the potential for Switzerland to be an important hub in this nascent, fast-growing yet volatile industry. In the short term, many crypto-currency startups set up shop in Zug due to the permissiveness of local regulations. In the long term, however, the ability to stabilize digital currency markets will require regulation.
Innovation is has definitely become more important to Swiss authorities as witnessed by initiatives to incentivize startups, launch incubators and sponsor accelerators. Still, a positive perception of entrepreneurship and innovation in the public eye – especially to young people choosing a career – can only be realized through changes in the Swiss education system where experts are calling for more entrepreneurship education programs on both the primary and secondary levels.
We may not be there yet, but the positive steps taken to encourage innovation must be expanded and accelerated to keep Swiss companies competitive in the world economy.
Innohub is a global ecosystem of advisors, talent, and funding to deliver innovation for corporate business challenges. Along with our partners, Swisscom and e-Foresight, we are bringing together top Swiss regulatory professionals with key technology leaders from Switzerland, the UK and Israel. Regulators, compliance officers and technology leaders have been working independently of one another for too long – now is the time to come together and embrace innovation for the benefit of the entire regulatory compliance ecosystem.
We believe that attending events such as RegTech 2018 spur innovation and bring Switzerland one step closer to claiming its place as a global leader in finance, insurance and regulation entering the 21st century.
Featured image via Pixabay