Sat, Jun 22, 2024

The official Financial Regulation Journal of SAIFM

Keep an open mind and an ear to the ground

By Theresa van Diggelen
and Anel Naude

The Fourth Industrial Revolution (4IR) continues to shape our conversations and considerations around how we might need to adapt, or what skills will be needed to sustain the workplace of the future. The 4IR brings with it fast-paced change and a digital shift unlike any other.

The introduction of Financial Technology (Fintech) and Regulatory Technology (Regtech) change the game substantially for compliance in financial services, even if it is still early days.  While AI-based resources will certainly enhance what companies are able to do, at a quicker pace, there will be a need for the human element and it’s best to keep an open mind and an ear to the ground.

“Companies and individuals in this industry who are not willing to make use of technology and choose to rather remain ignorant to what is out there, are definitely going to struggle down the line,” says Theresa van Diggelen, Compliance Officer at Compli-Serve SA.

“It is becoming more and more important to be open to changing the way we approach certain tasks. We need to upskill ourselves in how different types of technology can – and should- be used in different scenarios we may find ourselves in, within our industry.  This being said, we also need to know when technology will contribute positively to a situation and when it won’t.”

She says this is a skill that not many people possess – “very often business owners throw technology at everything or are totally against it and there is no in-between.” It is not only that we should embrace technology and what it can offer us, but we should also educate ourselves on the risks becoming apparent because of technology. 

What we use to build apps and programs to assist in our tasks, will only be as powerful as the quality of the data we are provided with. We need to understand the importance of data quality and the protection of this data. Recent allegations against the likes of Cambridge Analytica hit home just how vulnerable we are, simply through being a participant online, no matter how small. It’s rare these days to find individuals who don’t digitally transact in some way.

“It is important to manage and mitigate these risks as best we can,” Theresa adds. “The only way is if we understand and are willing to learn how technology can be used negatively. We need to be practical about the real risks that exist. The use of tech opens up a world that is both exciting and scary, depending on how you choose to view it.”

FinTech may be instrumental in making financial services available to a much larger portion of the population. “We just need to deal with the risk of clients entering into less suitable financial transactions and the ease with which unregulated entities can operate in our market,” says Anel Naude, another Compliance Officer from Compli-Serve.  Anti-money laundering (AML) processes as implemented by the FIC Amendment Act, coupled with pending cryptocurrency regulation within COFI developments do shed some light at the end of the tunnel.

“FinTech also poses another healthy stretch to compliance monitoring solutions. Compliance officers may not understand the algorithms and code, but we will definitely need to test the results obtained. Compliance with cybersecurity and risk prevention should always be top of mind as well,” Anel adds. 

Regtech should – over the long-term – provide valuable tools supporting various compliance outcomes on an ongoing basis. “It seems, however, that initial implementation and set-up to tailor make systems to the specific entity or industry segment may be onerous, or time and resource intensive,” Anel believes, so finding a balance will also ease the process.

“Skills needed in the future will centre around information technology. Understanding computer systems and problem solving in terms of monitoring and testing outcomes, will be valuable. Keeping up with compliance will be equally essential, as regulation unfolds and ultimately helps steer how the 4IR will impact us all,” Anel concludes.

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