Why compliance and transparency are vital for digital financial solutions

A blogpost by Kidbrooke has detailed how financial organisations can ensure regulatory compliance and transparency when it comes to their digital financial products.

Being such a highly regulated industry, the financial services sector can sometimes see innovation slowed down and profits sunk due to weighty regulatory constraints. However, Kidbrooke underlined that these regulations are critical to building a trustworthy and healthy financial system.

It is key for companies who are looking to provide good quality wealth management services that there is an absence of conflicts of interest – with a certainty that the product supporting a firm’s decision making is independent, objective and auditable being imperative.

Kidbrooke remarked, “The regulations shape the way financial businesses operate, and therefore it is vital to examine whether the considered product or service supports your business model. For instance, one of our customers, one of the largest insurers of Sweden, has recently released an investment guidance journey with an option to switch to regulated advice in case the end customer needs their support.”

The company added that regulatory reporting is a key area to consider when it comes to businesses using innovative technology in their offerings – as while some solutions may deliver acceptable results, they may also lack auditability, transparency and interpretability.

In addition, the differences in regulations and tax regimes can make international expansion ever more pressing for financial companies. Therefore, Kidbrooke suggests it is good to approach selecting a financial analytics provider with a ‘long-term perspective’ and ensure it supports your roadmap.

Kidbrooke concluded, “Despite the industry-wide focus on digitalization, trust and transparency are core values of the financial industry and are crucial elements of the modern customer experience. Therefore, whether you decide on building a fully automated self-service financial journey or a hybrid one, it is paramount to consider the auditability, independence and flexibility of the financial analytics driving your offerings.

“A carefully selected solution can significantly cut the compliance expenditures, allow for quick and easy internal adjustments at each point of your journey and even simplify your international expansion.”

The full blogpost can be found here.

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