The complexity of financial regulation is no longer an inevitability in Switzerland

Acts, regulations, circulars and standards are piling up and piling up, whether it is in Switzerland, the European Union or at the level of other international bodies. The result is undoubtedly that financial regulation is genuinely complex. However, simplifying what is complex demonstrates a thorough understanding of the subject. Faced with this situation, as experienced by Swiss banks and the consultancies that support them, how can we turn this philosophy into a reality in the regulatory field? Regulatory Technologies, known as RegTech, now provide practical solutions. Find out how in this article.

1 – Regulatory provisions that accumulate and complicate compliance

Financial regulations in Switzerland involve thousands of pages of documentation. Furthermore, the complexity is increased by the fact that regulatory provisions are constantly evolving in order to adapt and respond to the various global financial crises. Yet, Switzerland seeks to reduce this complexity for small banks. It has introduced the concept of proportionality into banking regulation.

1.1 – Multiple sources of regulatory information

Whether the regulatory provisions are Swiss, international or drawn up at European level, for example, all banks are faced with the complexity associated with the sheer volume of information.

Depending on the subjects and reports to be processed,  financial regulatory management requires consultation of, among other things

• FINMA acts, ordinances and circulars ;
• explanatory reports, comments and consultation reports issued by the FDF and FINMA, i.e. 620 pages for 2022 alone ;
• regulatory sources related to changes in self-regulation (comments and texts of the SBA and AMAS) ;
• draft legislation, such as the one relating to Basel III final ;
• regulatory changes induced by legislation other than financial regulations.

1.2 – The complexity of financial regulations is also due to ongoing changes

The balance often remains precarious between too much financial regulations and a lack of regulation in certain areas. For each global banking crisis, there is a corresponding change in legislation. For example, it was in the wake of the 2008-2009 crisis that the Basel Committee began work on Basel III and then Basel III Final.

The new global upheavals, both in the United States and in Switzerland, will probably lead to further changes. Particularly in terms of regulatory ratios, the liquidity risk and interest rate risk aspects are likely to evolve. All these developments contribute to increasing the complexity of financial regulation in Switzerland.

1.3 – Swiss regulators seek to reduce complexity for small banks

Faced with this difficulty in implementing regulatory requirements, Switzerland has introduced simplification measures for the smallest financial institutions. Since the beginning of 2020, small banks have been exempted from certain prudential requirements.

However, FINMA emphasizes the importance of a dynamic approach in its article “Experiences with the small banks regime” published in the small banks dossier. In the same extract from the 2021 Annual Report, it adds that “other possible relaxations will therefore have to be considered in the future when drawing up or updating the regulations”.

2 – A tool to cope with the complexity of financial regulation: RegTech

As written by BSI Economics in 2017. “The complexity of regulation and supervision of the financial system has indeed required several layers of regulation, with the aim of financial stability, aimed at encouraging international cooperation and convergence of standards, both at European and international level.” This is a fact. However, thanks to RegTechs, this complexity is not inevitable.

2.1 – What is a RegTech and what areas does it cover?

RegTechs offer specialised services to financial institutions to manage compliance. RegTech players use technologies such as artificial intelligence, big data, the cloud and automation.

The areas of intervention are numerous. From data protection and anti-money laundering to regulatory monitoring and compliance management, RegTechs cover the full range of regulatory complexity.

2.2 – e-Reg: a RegTech solution to simplify regulatory management in Swiss banks

By adopting a RegTech tool such as the one offered by easyReg, a bank or a consultancy working with financial institutions is able to grasp the complexity.

2.2.1 – Our RegTech mission

Our company’s mission is to simplify all regulatory work. Whether you work in the finance department of a bank, a law firm or a consultancy firm, with the e-Reg SaaS platform, you can benefit from the following advantages :

• quickly identify the right information in all Swiss and international regulations ;
• save time in your regulatory management activities ;
• reduce the cost of compliance as well as the risks of non-compliance ;
• use a RegTech tool to manage regulatory changes in a collaborative spirit.

2.2.2 – Example: easier document management for special regulatory processes

The holidays are approaching. Are employees within your bank or consultancy firm worried about their backups, who are responsible for replacing them while they are away? You may want to reduce the complexity of financial regulation work scattered across teams. With the e-Reg tool, your teams can organise delicate or arduous tasks in advance.

This is the case for the documentation of special processes relating to regulatory reporting in Switzerland. The same applies to episodic tasks that require detailed study of the regulations. Our platform helps your teams save time by providing clear, up-to-date and easily accessible documentation.

Don’t miss out on RegTech tool available progress. It is possible to implement an adapted technological process designed for the specificities of Switzerland. It relieves the banking sector and all its financial services staff responsible for regulation. Reducing time and costs, limiting risks, streamlining exchanges and managing regulatory changes, RegTech helps to make compliance less complex. If you want to see by yourself, there’s nothing better than an online demo of e-Reg !