ASIC (Australian Securities and Investments Commission) had published a report summarising the regtech initiatives it undertook during the 2019–20 financial year.
“We consider that regulatory technology (regtech) has significant potential to help businesses enhance their risk management and compliance activities,” ASIC says in the report. “These enhancements will help deliver ‘compliance by design’ business models, as well as better consumer and market integrity outcomes.”
In 2020, ASIC hosted two public regtech initiatives. In July, a public information session focused on the use of regtech in monitoring and compliance of financial services and remote supervision of staff. In August, a public problem-solving event was used to demonstrate how AI/machine learning can be used to support good lending practices.
Suptech initiatives during the 2019-2020 year outlined in the report include:
- A trial using machine learning to help ASIC identify potential misconduct in financial services promotions that targeted vulnerable consumers, which spiked during the pandemic
- Engagement of KPMG to deliver a voice analytics operational framework to guide supervisory and investigative projects involving audio file reviews.
- A proof-of-concept deliver a data automation and process workflow tool to enhance productivity in analyzing licensing-related information and reports of misconduct
- A project to use text analytics and natural language processing to help automate parts of the prospectus review process and identify concerning prospectus features
- The development of an enhanced evidence score capability to help enforcement teams prioritize review efforts when receiving large volumes of evidentiary files
The report highlights the importance of good data governance, skilled data-literate staff, and human review and input when implementing regtech applications.
It also says ASIC has identified an opportunity to modernize corporate and financial services laws by recognizing delivery of outcomes in a digital and remote environment.
ASIC’s recent regtech initiatives were facilitated by the funding it received from the government in August 2018 to promote Australia as a regtech leader.
While ASIC does not have special budget funding for regtech for the 2020-2021 financial year, it says it will continue to support the regtech community through the Innovation Hub, a quarterly RegTech Liaison Forum, and its work with the GFIN (Global Financial Innovation Network).
Key areas of focus ASIC is considering for its 2020-2021 regtech initiatives include breach reporting, debt collection, design and distribution of financial products; digital financial reporting, and cyber and operational resilience.
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