Peer to Peer Magazine

62 PEER TO PEER: THE QUARTERLY MAGAZINE OF ILTA | SUMMER 2016 FEATURES Tame Regulatory Chaos with Cognitive Technologies FinTech The introduction of new financial technologies is accelerating, potentially outpacing regulators' ability to properly implement appropriate regulations in a timely manner. Regulators around the globe are struggling to develop local, regional and global regulatory frameworks that can encourage the implementation of new innovations, while protecting consumers and facilitating cross-border financial flows. Assessing and managing risk in such a fluid regulatory environment will be difficult for all parties involved: technology developers, financial institutions and customers. Cybersecurity Institutions are increasingly being required to continually assess their cybersecurity risk profiles. Regulators anticipate that the "Internet of Things" will grow with the rapid expansion of internet-connected devices, adding exponential complexity to managing cyber threats. Advanced cyber analytics will be required to stay ahead of risks on such a scale. Tackling, Not Avoiding, Compliance In recent years, many financial institutions have adopted a strategy of lowering risk by shedding entire swaths of customers or geographic areas perceived to be trouble-prone, rather than comply with the increasingly complex regulatory frameworks. This is being seen as a way to potentially avoid billions of dollars in sanctions. Faced with the rapidly expanding scope and complexity of the global regulatory environment, organizations must look for ways to address and meet their compliance requirements, not avoid them. Cuing off entire markets and closing existing businesses is not a viable long-term business strategy that supports growth. And, more important, it might not shield businesses from regulatory entanglements; regulators are examining these "de-risking" strategies, which could soon draw the ire of regulators. A New Essential Tool The path forward requires the development of new tools that can effectively manage all the data, regulations and issues at these extreme levels of global complexity. Cognitive technologies hold the potential to: » Connect all these points of information » Understand their relationships and how they interrelate and affect each other » Predict how these various factors change over time These technologies can identify paerns and project trends to inform more effective strategies. Corporations could beer manage risk, allocate resources and move forward with confidence. Cognitive technologies hold the key to successfully managing the complex and increasingly dynamic environment of regulations and compliance that companies will face in this future-focused era. P2P Cognitive technologies hold the key to successfully managing the complex and increasingly dynamic environment of regulations and compliance.

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