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How Regulatory Requirements Impact Software Development in 2024

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The tech regulation industry is constantly changing as new technologies, guidelines, and reporting requirements emerge. If you are developing software in this rapidly evolving landscape, you will face an increasing number of challenges. With new regulations set to go live in the near future, there will be growing pressure to create compliant, secure, and resilient applications.

In this article, we will explore the current state of the Regtech industry and how regulatory requirements impact software development in 2024.

Skilled talent shortage

A major challenge in the regulatory industry is the need for more skilled talent with experience in the field. According to the ISACA’s State of Security in 2022 report, many organizations are struggling to find and retain qualified personnel. The growing demand for professionals who understand the complex regulatory landscape creates a competitive job market, exacerbating the issue.

The most common skill gaps include soft skills (54%), cloud computing (52%), and security control (34%). In 2024, software providers can prioritize training staff in these essential skills to address the shortage and ensure compliance with industry needs.

Data Privacy

Since the European Union adopted the GDPR (General Data Protection Regulation) in 2016, giving E.U. citizens control over their data and its usage, other countries have followed suit to strengthen individuals’ control over their personal information. The United States has also implemented its privacy regulations, such as the California Consumer Privacy Act (CCPA) in 2018, which grants citizens greater control over their data.

Last year, 29 US states introduced data privacy bills, including the California Privacy Rights Act, effective from January 1st, 2024, expanding the CCPA to give residents even more power over their personal information. The American Data and Privacy Protection Act (ADPPA) aims to further regulate the gathering and storing of consumer information.

As a software provider, there is a growing legal and moral obligation to meet the increased need for user privacy. Understanding the regulations and identifying the requirements your product or service needs to meet is the first step. Incorporating security principles and processes into your work, such as Privacy by Design (PbD), can help ensure compliance with the latest regulations.

The increasing complexity of regulatory requirements

The European Market Infrastructure Regulation (EMIR), introduced in 2012, aimed to simplify and improve the regulation of over-the-counter (OTC) derivatives and central counterparties (CCPs) in the E.U. By introducing new reporting requirements, the EMIR refit, going live on April 29th, 2024, significantly increases the complexity of regulatory reporting. Software companies must keep a close watch on these changes, invest in compliance technology, and consider automating some regulatory processes to remain compliant.

Industry collaboration

With the increasing regulatory complexity, collaboration within the industry is crucial for ensuring compliance. The growing adoption of the unified ISO XML 20022 format is a testament to this, allowing all market participants to report similarly regardless of location, facilitating collaboration and cross-border reporting while reducing inconsistent reports.

Working groups are a prominent example of industry collaboration. Participants, subject matter experts, and clients come together to understand industry needs, focus their efforts, and ensure solutions cover all use cases. An example of an upcoming challenge being tackled by working groups is UTI (Unique Trade Identifier) matching, aiming to streamline trade details reconciliation and reduce errors in reporting.

Wrap Up

Technological regulation is a rapidly evolving landscape, and software developers need to make a conscious effort to stay compliant. In 2024, individuals will have much greater control over their data, accompanied by an increasingly complex reporting environment and a shortage of skilled talent with regulatory experience.

Industry participants are coming together and collaborating on a growing scale, spearheading breakthroughs and streamlining reporting and compliance processes. If you’re having trouble meeting the latest requirements, a reputable RegTech software partner could provide assistance.

Staying informed about tech regulation developments brings you closer to keeping your operation aligned and secure.

Featured Image Credit: Provided by the Author; Dreamix eu; Thank you!

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