While regulation is often described as a threat to innovation, the two go hand in hand as innovation drives efficiency in regulation and regulation ensures proper practice in innovation. RegTech, the use of new technology to facilitate the delivery of regulatory requirements, has rapidly risen to prominence.
Regulators often find themselves without the resources to fulfil their increasingly demanding roles. In a fast-paced and innovation-driven environment, it is essential that regulators are agile and responsive to change in order to maintain the effectiveness and efficiency being demanded of them.
Innovation in regulatory strategy is the need of the hour, as regulators are called to keep pace with change and work collaboratively with stakeholders to ensure the best regulatory outcomes. This will be achieved through innovative and alternative approaches to regulatory design, the use of the latest technology in the regulatory process and using innovative methods, tools and frameworks to engage with stakeholders.
Digital tools such as artificial intelligence, robotics, blockchain and analytics offer huge opportunities in the efficiency of risk management and regulation. Regulating complex environments and achieving consumer engagement and compliance can be streamlined through new technologies and methods.
With a current 23.14 billion devices connected with IoT and that number projected to jump to 75.44 billion in 2025, regulation is becoming crucial for innovation to remain sustainable.
Some of the tools and technologies regulators can utilise are:
- CX Tools
Having a customer experience mindset during the design phase of regulation can help regulators make compliance easier for consumers and boost voluntary compliance rates. Through methods such as design thinking, journey mapping, user co-creation and personalisation, regulatory efforts designed with the end-user in mind will ensure enforcement is simple.
Sandboxes are the go-to mechanism for piloting new strategies in a low-risk environment. The NSW Government endorsed the use of regulatory sandboxes in 2016 to encourage “innovators to raise regulatory barriers with the relevant regulator and allows innovators to negotiate testing environments for new business models or products that are constrained by or outside of existing regulations.”
- Robotic Process Automation
Regulatory agencies are beginning to use RPA to automate repetitive, predictable processes and reduce the time and resources needed for humans to complete the same steps. As automation evolves, it can be coupled with artificial intelligence to perform higher-value operations.
- Augmented Reality
It can be difficult for physical inspections to take place working within time constraints and location barriers. By overlaying digital information on the physical environment to enable inspection of physical places or people without the need to be there.
Similar to how marketers use nudges to encourage shoppers to make a purchase, nudging involves prompting people to make decisions that support their own long-term goals. Nudges can be used to encourage people to pay taxes promptly and comply with regulations specific to them.
The Innovating for Better Regulatory Outcomes conference, running in Canberra from 12 – 13 November 2019, will bring together senior leaders from state and federal regulators and regulatory agencies to discuss and develop strategies to innovate for better regulatory outcomes by being responsive and adaptive to the changing environment and the needs of their stakeholders. It will facilitate a collaborative discussion on how regulators can collaborate to become innovators, work jointly to detect non-compliance and best utilise resources available to them in order to achieve the best outcomes for society.