Ali Abbas
Using compliance as a competitive advantage in payments
The payments sector is on the precipice of change; from the demand in crypto to the pressures to digitise during the pandemic, payments providers are grappling with meeting compliance requirements while innovating to keep up with the sector’s changing landscape.
For many, regulatory compliance is often an afterthought, or something that is simply a check box activity. While the industry has benefited from rapid growth over the last few years, coupled with little oversight, regulators are turning their attention to payments, specifically around issues of consumer protection, security, and data privacy. We currently see a landscape of ever-changing rules and regulations, as well as inconsistent regulatory frameworks that grow increasingly fragmented.
The digitalisation of payments frameworks provides a key opportunity for payments providers to reconsider how compliance and RegTech can be a competitive advantage during a complex period for regulation. Whether it’s creating time efficiencies by reducing manual processes, streamlining with technology, or cutting down on regulatory fees – investing in compliance and RegTech is a crucial way for the payments sector to meet its business goals in a continuously evolving financial ecosystem.
The role of RegTech in payments compliance
For the payments sector in particular, compliance is a back-office activity that can often fall by the wayside when it comes to technology upgrades. Consumer-facing infrastructure such as buy-now-pay-later (BNPL) functions, point of sales systems and digital wallets have been the first areas to secure funding from the business. But the influx of regulatory scrutiny, as well as consumer demand for transparency, is pushing payments operators to reconsider how they disseminate budget across the business, specifically around compliance technology.
Using compliance as a competitive advantage
Payments providers are beginning to understand the importance of flexible and innovative compliance systems, but the idea that compliance tech and RegTech can be more than a means to an end has yet to register with the majority of providers in this space.
Using modernised technologies across the middle and back office can help payments businesses create efficiencies by reducing manual compliance requirements, such as regulatory reporting and data checks. As well as this, automation and regulatory intelligence solutions use artificial intelligence and machine learning to advance processes and remove human error, while also pulling in data sources to automatically check for new regulatory requirements amid an evolving landscape.
CUBE’s RegAssure solution combines AI technology with a flexible software-as-a-service framework that grows with a customer’s business to provide agile configurations to meet its changing requirements.
Payments providers that are leveraging technology upgrades to patch together old systems will no doubt experience issues down the road once their outdated frameworks are unable to meet regulatory requirements. Gone are the days where internal technology builds are sustainable options for businesses of all sizes.
For small and medium size payments providers, building all-new technology frameworks is not only an outdated practise, but unsustainable from a budget perspective. Leveraging state-of-the-art RegTech solutions from leading providers such as CUBE is a great example of how SMB payments providers can compete with the sector’s giants and use compliance to their business advantage.
The future of payments compliance
With both the digital payments and regulatory landscapes continuing to scale up at rapid rates, it’s time for the payments sector to turn its focus to utilising technology to not only meet baseline requirements, but as a partner to create business efficiencies and advantages in the marketplace.
Products such as CUBE’s RegAssure provide seamless integration and are backed with artificial intelligence-based technologies and techniques that reduce the risk of non-compliance in a fast-moving regulatory environment. By reshaping how they use outsourced RegTech, payments providers of all sizes will be able to ensure regulatory compliance while also benefiting from efficiencies across a variety of processes, from reporting to data management. Looking ahead, for the payments sector to properly tackle the current demands of digitalisation and increased regulation while remaining within budget, flexible technology systems will become increasingly important to their success.
