ESMA has spoken on how the financial services industry has adopted Regtech. Patrick Armstrong looked at the changes in how we work that have been subject to almost constant change in the past 10 years. Yet, he said, many institutions that survived the financial crisis still have in place antiquated IT systems that are ineffective, expensive and susceptible to cybercrime. Firms are now looking to technological solutions to help them with their day to day needs and to meet increasing regulatory demands. He discussed how regulators use data for supervisory purposes and how ESMA has been encouraging digitalisation from regulators and regulated firms with whom it interacts. He said ESMA is seeing new market entrants making significant use of technology and allocating greater amounts of capital to it. He spoke of how institutions need to use data so it meets both customer needs from a Fintech perspective and regulatory requirements from a Regtech perspective. He finished by speaking of key risks – highlighting the risk of disintermediation and the need for oversight to extend down the value chain, so nobody delegates responsibility.
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