RegTech in Action: Risk-compliant Investment Advisory in Real Time

RegTech supports banks in meeting regulatory requirements in a systematic, correct and efficient manner. Some of these solutions also generate additional value for a host of other stakeholders – including end-clients.

Deritrade, a virtual marketplace for structured products created by Bank Vontobel AG, is one innovative solution that includes a significant RegTech component. Insight spoke to Thomas Stadler, Head Distribution Platform Solutions at Bank Vontobel AG, and RegTech expert David Bundi from PwC Legal Switzerland about the benefits for both clients and their advisors.

insight: Mr Stadler, which modern technological achievement has, in your opinion, had the greatest influence on client advisory services in the investment business?

Thomas Stadler: The Internet and smartphones have had a decisive impact on the work of client advisors. Today’s investors are always online via their mobile devices and have access to a vast range of information. Client advisors would be simply unable to meet the high requirements that apply to advisory services in the regulatory space alone without the use of Internet-based tools. Innovative platforms have made investment advisory services faster and much more efficient than they were a decade ago – when the purchase of structured products still involved a number of manual steps. In addition, easier access to information via the Internet has resulted in greater calls for price transparency from today’s clients.

Where do you see the greatest advantages in the use of new technologies in investment advisory?

New technologies reduce production costs for investment products and thus ultimately lead to an improved client offering. Wealth managers who incorporate digital tools into the advisory process can secure a major competitive advantage on the back of technological advances. On the one hand, digital platforms help providers to scale up their offering while, at the same time, shortening the time taken to issue new products. On the other hand, issuing platforms enable wealth managers and investment advisors to close gaps in their product offerings. And this is precisely where RegTech solutions and issuing platforms such as deritrade come in.

What is deritrade and can you describe the platform’s strengths?

Vontobel’s deritrade platform is like a virtual marketplace where client advisors or external asset managers can issue structured products for clients – in real time and tailored to each client’s wishes. The structured products business is strictly regulated. There are a large number of requirements that need to be observed. Based on a fully automated process, the platform takes account of all relevant regulatory requirements so that clients and the financial institution have the certainty that everything is perfectly legal in the truest sense of the word.

Mr Bundi, how would you categorize this solution in the RegTech context?

David Bundi: The aim of RegTech is to fulfill risk and compliance requirements and, wherever possible, to create further benefits. That is possible with this particular RegTech solution thanks to the integrated risk and compliance control for the complete product range and over the entire lifecycle. In addition, deritrade ensures optimal processes, even if the regulations change. The platform adapts flexibly to evolving operating conditions. Successful and forward-looking RegTech solutions are, in particular, also characterized by the fact that they can be continuously further developed on a modular basis. At the same time, they don’t solely address specific compliance challenges. They also provide significant added value for a large number of stakeholders. With the right mindset, digitization and regulation can thus work hand in hand.

The interview series ‘RegTech in Action’ provides an opportunity for banks to present successful RegTech solutions in operation within their organizations. Each discussion with ‘insight’ involves a bank representative and RegTech expert David Bundi, who places the different RegTech solutions in an overall context.