Regtech has grown exponentially over the past years, driven by incredible innovations in AI and automation. Out of necessity, financial services firms have loaded up on specialized compliance tools from multiple vendors. Is it time to look at your firm's roster of vendors and start consolidating?
The regtech sector first began to gain traction in 2008 in response to the enormous regulatory changes triggered by the global financial crisis. The new environment had many financial institutions seeking solutions to their increasingly inadequate manual compliance processes and legacy systems for managing complex regulatory requirements.
With new AML laws, stricter KYC requirements and increased overall regulatory scrutiny, in-house compliance departments found it difficult to keep up with the volume of regulatory updates. Regtech service providers emerged to provide firms with outsourced solutions to streamline workflows, automate manual processes and mitigate risk.
Today, regtech is more critical than ever and has become deeply integrated into most compliance programs across the industry. Firms use multiple third-party providers to help them perform vital compliance, data and cybersecurity functions. But how many tech partners are too many? Should financial services firms consider simplifying their vendor management by finding providers that combine several solutions into one platform?
Consolidating various regtech functions under a single provider can help firms streamline processes, reduce administrative burdens, achieve cost savings and ensure seamless integration of services. Multiple vendors mean multiple due diligence, contracts and points of contact.
While having a strong, mutually beneficial working relationship with your vendors and third-party providers is critical to operating a successful business, a partnership should never feel like a hostage situation. The consequences of allowing that to happen can be dire, especially in our increasingly outsourced digital world.
A partnership should never feel like a hostage situation.
Through the strategic acquisition of smaller firms with specialized solutions, providers are integrating and enhancing their offerings to better compete in the marketplace.
What You Should Look For In A Unified Platform
Regulated firms are overwhelmed by disconnected single-function solutions, outdated legacy technology and increasing audit and enforcement activity. Managing regulations, cyber risk, policies and audit readiness across disconnected systems creates more work and more risk.
If you are considering simplifying your regulatory tech stack, you need to search for a provider with a modular and scalable platform that offers capabilities aligned with where your firm is today and where it needs to be tomorrow. The platform needs to deliver real value, not just automation for its own sake.
The right platform can eliminate the need for compliance professionals to juggle multiple vendors by combining expert services with intelligent technology in one scalable system. Any comprehensive system you are looking at should be purpose-built for modern wealth management firms and provide:
- Real-time regulatory monitoring and updates
- AI-powered policy, ethics and risk oversight and reporting
- Automated compliance workflows for attestations, vendors and audits
- Compliance visibility from a secured dashboard
- Embedded “human-in-the-loop” hands-on expertise into every layer of its technology and service model
- Marketing and communication surveillance
- Data lake and integrations
- Cyber risk oversight
- Vendor cybersecurity due diligence
Consolidate Your Compliance, Cybersecurity And Data Infrastructure Engines
Today’s regulatory landscape demands more than disparate, reactive and siloed tools. The best platforms are intelligent, integrated and ahead of the curve when it comes to addressing a firm’s compliance, cybersecurity and data infrastructure needs.
Today’s regulatory landscape demands more than disparate, reactive and siloed tools.
For compliance, look for AI-guided policy surveillance, written supervisory procedure (WSP) gap testing, attestation workflows, trade oversight and marketing review — with embedded expert support for regulatory registration, audit readiness and ongoing program management.
Cybersecurity requires real-time visibility across advisor devices, vendors and networks, with risk scoring and compliance reporting aligned to SEC cybersecurity and ADV Part C requirements.
Data infrastructure needs to be seamlessly integrated across core wealthtech systems, with automated data hygiene and a centralized AI-ready lakehouse for reporting, analytics and regulatory response.
For financial firms facing increasingly complex regulatory demands, their goal in consolidating vendors should be to have a single command center that reduces vendor sprawl, cuts risk and streamlines operations.
Sid Yenamandra is Founder and CEO of Surge Ventures, the parent company of RegVerse, Kovair, Security Snapshot and MGL Consulting, which have been unified to create SurgeONE.ai.
