Regulatory Challenges in the Financial Industry and ITs role in mitigating them

Posted by at 15:18h

Regulation (noun) /reg-yuhley-shuh n/: The act of regulating or the state of being regulated. A principle, rule, or law designed to control or govern conduct. A governmental order having the force of law.

Although the financial industry has been subject to some form of regulation ever since its inception, the inadequacies of this archaic system of regulations was painfully brought to light during the financial crisis of 2007. After the near-global meltdown of the financial system, it became apparent that the industry was not being efficiently regulated and this led to a series of reforms and regulatory directives being issued.


What are some of the regulatory challenges?


  1. Dodd-Frank (Dodd Frank Wall Street Reform and Consumer Protection ACT)

A federal law passed in response to the great recession of 2007-2008 with the stated aim of “promoting the financial stability of the United States by improving accountability and transparency in the financial system” Ref.1

  1. CCAR (Comprehensive Capital Analysis and Review)

An annual exercise mandated by the Federal Reserve to include comprehensive reporting. Ref. 2

  1. BASEL III (Basel committee on banking supervision)

A comprehensive set of reforms with the aim of improving risk management & governance as well as enabling transparency within the banking sector. Ref. 3

  1. USA Patriot ACT (“Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism”) ACT of 2001.

Although wide ranging, this ACT includes specific regulatory burdens on financial services companies to prevent money laundering, report & classify international transactions etc. Ref. 4

What is the impact of these regulatory challenges?

The most direct impact of the newly imposed regulatory challenges has been the additional burden of compliance. This in turn imposes enormous monetary strain on the organization as the cost of no compliance is significantly higher than the cost of compliance. Organizations struggle to cope with increased scrutiny & reporting requirements by creating and maintaining a vast repository of information for the purposes of aggregating the data for dissemination to clients, investors, government regulatory bodies. This in turn places a significant burden on the Information Technology division of organizations in order to cater to the demand for huge volumes of data and reports. There is also additional onus on the Chief Data Officer to ensure compliance and adherence to various regulatory requirements while at the same time maintaining data integrity and sensitivity. Organizations now face the prospect of constantly monitoring applications for changes that might affect regulatory concerns. The newly mandated reporting requirements also fuel the need to improve data quality and make sure that the available data is dependable, accurate and timely. Along with making sure that quality data is available, companies also have to make sure that proper risk governance processes are put in place.


Mitigating the regulatory challenges – how can ROKITT ASTRA help?

ROKITT ASTRATM can help in mitigating a lot of the concerns and burdens placed on the Information Technology divisions of organizations. The tool has a number of smart modules like Synthetic Data generation and Data masking which ensure the obfuscation of sensitive information prior to dissemination. ROKITT ASTRATM also has intelligent discovery capabilities that can expose previously hidden relationships within an application as well as the flow of information between applications. These automated and intelligent features significantly help in providing a robust and mature window into the data landscape within the organization, especially the end-to-end flow of information, which is a key concern of regulators.

With the additional insight into the data landscape provide by ROKITT ASTRATM , it becomes easier to comply with the regulatory mandates through efficient reporting as well as information obfuscation.  ROKITT ASTRATM also provides application Data (and Metadata) monitoring – the tool constantly monitors the application for changes to the metadata which coupled with its automated discovery capabilities gives the organization the power to ensure timely compliance to regulations at every stage of the application life cycle.



Regulations are not meant to obstruct financial companies but rather they are the means to improve market outcomes. Regulations also have the benefit of ensuring that companies remain transparent while maintaining accountability.

It is becoming increasingly clear that there is no “one size fits all” solution available to mitigate regulatory challenges so companies will have to embrace a number of different processes and methodologies in order to pro-actively comply with regulations. These processes should ideally include employee training, efficient use of existing information/data, use of SME consultants and automated tools for data mining and reporting (example: ROKITT ASTRATM)