Tech enabled regulation may improve consumer trust
It’s naïve to suggest the trust deficit that has occurred with financial service providers and consumers would not extend to other traditional industries, but there is hope of change through innovation, according to a technology lawyer.
Peter Jones, a partner in DLA Piper’s Sydney office, said there is a renewed expectation of transparency, good governance and regulatory compliance of businesses and organisations from consumers, especially post banking royal commission.
Community expectations of change should be expected across all established, ‘traditional’ industries in Australia, he flagged, as “increased media and political scrutiny over their operations, customer demand for fairness and transparency in products/services and increased regulatory oversight” occurs.
While innovation will not provide a panacea for all changes to industries, systemic weaknesses and human decision-making processes “have, in some cases, been found wanting”, according to Mr Jones.
Innovation is able to provide “an impetus for traditional and regulated organisations to investigate the deployment of tools to assist not only with back office efficiency and productivity gains to assist in financial management”, he continued.
It is also capable of facilitating consumer-focused and consumer-tailored product development (and revenue generation) and to assist and inform enhanced risk-based decision-making processes and governance, he noted.
Mr Jones acknowledged too, that Australia remains in “a comparatively lower growth domestic and international economy, with the corresponding pressures this puts on profitability and cost efficiencies”.
He pointed out regulation technology (regtech), as being used by a number of organisations to assist in compliance practices, and focus on financial and non-financial risk.
He highlighted regtech’s ability to enhance internal organisational transparency and assist in real- and near-real time reporting to senior executives and the board of directors.
“There can be no doubt that many organisations in Australia have, to greater or lesser degrees, engaged in the deployment [of] innovative and disruptive technologies in their business,” he stated.
Similarly, Mr Jones cited insurance tech, or insurtech, as having been implemented by a large number of local and international insurers, with some being common to a number of industries.
While there are some obvious ones, including chatbots to facilitate a customer experience or machine learning in policy fulfilment, he said there are others which may not be as well-known.
These include data sources like vehicle telematics information and data from wearables, RFID chips, Internet-of-Things sensors to monitor things such as weather events, and even remote sensors for predictive maintenance which Mr Jones said look at risk, and can reduce the potential for insurance payouts.