About a-team Marketing Services
The knowledge platform for the financial technology industry
The knowledge platform for the financial technology industry

A-Team Insight Blogs

Automated Software is Replacing Human Decisions, Finds ESMA

Subscribe to our newsletter

A combination of supply-based developments and demand-based needs are potentially transforming the way financial institutions comply with regulation and supervisory authorities oversee market participants, warned the European Securities and Markets Authority (ESMA) in a new report released on March 14, 2019.

The regulator recently carried out an analysis of the regulatory and supervisory technologies currently being developed in response to various demand and supply drivers, finding that regulatory pressure and budget limitations are pushing the market towards an increased use of automated software to replace human decision-making activities.

“This trend is reinforced by supply drivers such as increasing computing capacity and improved data architecture,” noted the regulator. “Market participants are increasingly using new automated tools in areas such as fraud detection, regulatory reporting and risk management, while potential applications of new tools for regulators include greater surveillance capacity and improved data collection and management.”

With these new tools come challenges and risks, notably operational risk. However, with appropriate implementation and safeguards, RegTech and SupTech (supervisory technology) may help improve a financial institution’s ability to meet regulatory demands in a cost-efficient manner and help regulators to analyse increasingly large and complex datasets.

Foremost among the technological advances, ESMA identified the widespread use of cloud computing, the increased acceptance of Application Programming Interfaces (APIs) and advances in the fields of AI and Machine Learning (AI/ML).

The report also identified a number of risks and challenges for regulators and market participants: including the improvement of data collection and management, the need for a new digital transition and a move towards a new data-driven supervisory process, operational risks including cyber resiliency, and key risks from strategic incentives as firms learn how to leverage potential regulatory loopholes as they develop their RegTech expertise.

Subscribe to our newsletter

Related content

WEBINAR

Recorded Webinar: Best practice approaches to data management for regulatory reporting

Effective regulatory reporting requires firms to manage vast amounts of data across multiple systems, regions, and regulatory jurisdictions. With increasing scrutiny from regulators and the rising complexity of financial instruments, the need for a streamlined and strategic approach to data management has never been greater. Financial institutions must ensure accuracy, consistency, and timeliness in their...

BLOG

Regulations in the Balance as Institutions Remain Sustainability-Focussed: ESG Summit London Review

Despite a perception that ESG is in retreat around the world, financial institutions continue to take the issue very seriously as a matter of risk management, a trend that continues to exert an influence on the data demands of organisations. It isn’t even the compliance imperatives of organisations operating in heavily regulated parts of the...

EVENT

Data Management Summit New York City

Now in its 15th year the Data Management Summit NYC brings together the North American data management community to explore how data strategy is evolving to drive business outcomes and speed to market in changing times.

GUIDE

AI in Capital Markets: Practical Insight for a Transforming Industry – Free Handbook

AI is no longer on the horizon – it’s embedded in the infrastructure of modern capital markets. But separating real impact from inflated promises requires a grounded, practical understanding. The AI in Capital Markets Handbook 2025 provides exactly that. Designed for data-driven professionals across the trade life-cycle, compliance, infrastructure, and strategy, this handbook goes beyond...