RegTech Development Green Paper Published

The National Bank of Ukraine has published its Green Paper on the Development of RegTech in the Financial Market of Ukraine (hereinafter referred to as the “Green Paper”).

The document lays out the regulator’s current position on key issues of RegTech development and is intended for discussion with financial market participants.

“We must admit that banks’ current processes for researching their clients and combating fraud and money laundering fail to meet modern-day challenges rather often. Through FinTech solutions, banks have learned to provide quality customer experience when rendering services. Unfortunately, when banks have no time to process significant amounts of information, customers encounter inconveniences, wasting their time and losing their money or peace of mind. The effectiveness of processes that ensure compliance with the NBU’s regulatory requirements affects not only interactions between the regulator and financial market participants, but also banks’ and NBFIs’ cooperation with their customers. We therefore declare our intentions to comprehensively promote the development of RegTech solutions in the Ukrainian financial market. We are convinced that positive effects from their implementation will be felt by both market players and financial service consumers,” said NBU Deputy Governor Oleksii Shaban.

Green Paper’s relevance

RegTech development in the Ukrainian financial market is one of the tasks defined in the NBU Strategy and the Strategy of Ukrainian Financial Sector Development.

The regulator focuses on RegTech solutions for regulatory compliance in the following areas of financial services:

• risk management
• submission of reports to the regulator and provision of other information upon its request; disclosure of information
• prevention of and counteraction to legalization (laundering) of proceeds from crime, financing of terrorism, and proliferation of weapons of mass destruction; sanctions screening
• fraud prevention and counteraction.

The implementation and development of RegTech solutions will help optimize compliance processes, which will have a positive impact on both the regulator and its supervised entities.

Specifically, this will provide better opportunities for the NBU to exercise supervision and respond more quickly to challenges. The financial sector will become more sustainable and more manageable, and its competitiveness will increase. As a result, financial service consumers will enjoy higher security, better interactions with financial institutions, and more affordable financial products.

The NBU believes that the groundwork for RegTech development in Ukraine’s financial market should be active systemic cooperation between main participants of the financial market, where the primary role is designated to banks, NBFIs, and RegTech solution providers. Such interaction will allow financial institutions not only to meet today’s demands of the market, but also to become leaders of innovation.

At the same time, within its mandate, the NBU stands ready to take every measure necessary to facilitate the development of RegTech solutions in the Ukrainian financial market, while pursuing defined strategic goals and ensuring financial stability in the country.

Discussion opportunities:

The NBU expects that the RegTech development vision outlined in the Green Paper will encourage experts and financial market participants to discuss and further work together on this issue, including by:

• starting a dialogue by taking a survey of the financial market’s problems and expectations
• initiating work on RegTech development activities
• recording joint RegTech development achievements in a White Paper.

This will enable the regulator to identify and implement, jointly with market participants, the most optimal pathways for RegTech development.