Around 700 representatives of banks, insurers and supervisory authorities discussed the future of regulation and innovative technologies in Frankfurt.
For the 25th time, representatives of banks, insurers and supervisory authorities met at the RegTech Convention in Frankfurt to discuss current regulatory topics, the future of regulation and innovative technologies. This year’s event was held on November 14-15, 2018 under the motto “Regulation. Technology. Purpose.” Ten years after the financial crisis, industry representatives used the two conference days at Kap Europa for controversial debate. Keynotes and panel discussions with top-class speakers addressed the achievements of banking regulation over the past ten years, still existing deficiencies, but also opportunities offered by new technologies such as RegTech and SupTech.
The economics expert (Wirtschaftsweise) Prof Dr Isabel Schnabel opened the conference with her keynote speech on “10 years after Lehman – is regulation fit for purpose?”. After a brief overview of the economic environment in Germany, Europe and globally, she addressed the slowdown in economic growth and increasing risks due to trade wars, Brexit and rising interest rates. Despite visible progress in regulation and the achievements of the European Banking Union, further efforts are needed. Prof. Schnabel also called for a harmonization of the regulation in Europe, for the elimination of barriers to pan-European mergers and for strengthening the ESMA.
In the following panel discussion, representatives of banks and supervisory authorities engaged in a discussion with the economics expert on how to find a balance between the costs and benefits of regulation. The discussion participants shared the view that another crisis cannot be prevented, but that they were better prepared than ten years ago. However, the industry experts agreed that there are still deficiencies in regulation, mainly due to insufficient transparency and immense complexity. The participants of the granular data experience panel discussion also found that the high complexity poses a challenge for banks but also for supervision. In that context, the first experiences with AnaCredit were mentioned as a suitable example. Representatives of banks particularly criticized the high complexity, the lack of standardization of regulation in Europe and the volatility of regulation, i.e., adjustments and changes on short-notice. Supervisory authority representatives presented BIRD (Banks‘ Integrated Reporting Dictionary) as an initiative to manage complexity and to harmonize data management. At the same time, supervisory authorities were additionally concerned with new technologies such as machine learning in order to faster evaluate the growing volume of data.
The participants of the panel discussion on new technologies for regulatory reporting bemoaned that there is too much data and the view is still too retrospective, lacking not only a clear forward-looking view but also real-time data analyses. However, innovative technology such as big data, artificial intelligence and blockchain would offer great potential for automation processes, better communication, more transparency, more efficient corporate management as well as consumer and consultant protection.
Jürgen Lux, Chief Executive Officer RegTech at BearingPoint, summarizing the discussions and presentations of the main conference: “The next crisis is inevitable. There is too much complexity and we need more harmonization. More regulation is not the best solution. We have to change and have to face disruption with disruption.”
The conference agenda and motto for the 26th RegTech Convention will be pubslished soon.