In our recent report, RegTech for Regulatory Change, fintech research company Burnmark explored how digital customer behaviour has led to the emergence of new types of regulation. CUBE took a deep dive into the dataset to establish the three areas most affected by customer behaviour.
1. Cyber Security
The emergence and existence of technology has seen a wealth of new rules and regulations. Between 1991 and 2009, there were no recorded regulations surrounding certain technologies, such as cyber security.
Post financial crash, as the industry embraced innovation and digitisation, this landscape changed. Between 2010-2013, we start to see the creeping in of cyber legislation, with one major legislative change being implemented. Fast forward to 2014 and there have since been 16 major new rules introduced to the landscape.
Cyber security is a constantly evolving beast; it will continue to change and develop as new technologies unfold and as different jurisdictions catch on to the importance of security in the digital realm. With that in mind, it is likely we will continue to see an upwards trend towards new cyber security regulation over the coming years.
The same can be said for data sharing which, before 2014, had almost no formal regulatory framework in place.
2. Data Protection
Data has always been a valuable asset for financial institutions; however, it is only in the last decade that individuals have become fully aware of the importance of their data.
Where once a customer may have happily signed away innumerable documents to a business, they are now far more aware of the damage that can be done when data is not correctly managed – from fraud to financial loss.
This sentiment is reflected in the number of regulatory changes we’ve seen in the field, rising from just 5 regulatory changes between 1991-2009 to 18 major changes in the last 10 years alone.
It’s no secret that data protection varies across jurisdiction – from country to province. Attitudes are slowly evolving in this regard, spurred on by the roll-out of GDPR. Data protection is an area undergoing continuous change, which shows no sign of slowing.
3. Prudential Regulation
Of course, the greatest area of regulatory change post-2008 financial crash is in Prudential Regulation. After years of malpractice, inefficient risk measures and lack of capital controls across financial services – the regulators stepped into action. Between 1991-2009 only 2 major prudential regulations came into force. After 2010, this rose to 24 major regulations in ten years.
Regulators were (and are) no longer able to allow gaps to form in compliance systems. In some respects, this is the backbone of the amassing financial regulations that are published daily.
Following 2008, financial regulators are aware that history must not repeat itself. With that in mind, financial regulations will continue to amass, in a bid to ensure no stone is left unturned. Managing those regulatory changes without the use of RegTech, will prove challenging – if not impossible.