Digital Transformation of Consultancy at KPMG

LUXEMBOURG, Feb. 12, 2019 /PRNewswire-PRWeb/ -- Historically, the consulting business has been a low-tech /paper-based business. As Financial Technologies ("FinTechs") and digital services gain momentum, the consulting business is obliged to adapt swiftly and contribute in defining the agenda for the digital future of the finance industry. This cannot be achieved by simply offering digital versions of traditional consulting services or adding a digital layer to old practices. Rather, there is a need for a comprehensive business transformation to foster digitally enabled business models, operations and processes. This is not only a challenge for consultants and their clients. Governments are also puzzled with many questions on how to regulate and tax the new digital world:

1. How should investors be protected from complex financial products and institutions? In Europe, such question gave rise to initiatives such as Solvency, Basel, UCITSD, AIFMD and MiFID.

2. How should investors whose portfolios are spread across the globe be taxed? Initiatives such as FATCA, CRS, QI, MDR, TRACE and other US tax initiatives seek to address this issue.

3. How should off payroll digitalized workforce or digital workforce be taxed? BEPS action plan and UK tax authorities have proposed some partial solutions.

In addressing these issues, regulators are heavily relying on data and analytics from financial institutions and thus sharing part of the burden with the industry. On their turn, financial organizations are increasingly relying on Regulatory Technologies ("RegTechs"). RegTechs refer to a set of companies and solutions that combine innovative technologies and regulations to address regulatory requirements across industries, including financial services. There are three types of RegTechs: Quantitative RegTechs are those kind of technologies that enable financial institutions to deal with a large set of data; Process centric RegTechs are used to improve or redefine a particular process; and Pure regulatory RegTechs do not focus on data or on process but rather on identifying new regulations and monitoring changes.

So what does this all mean for the finance industry? Mainly large banking institutions have adopted IT solutions that can handle a huge volume of transactions or data to meet their local or international compliance challenges. In the future, however, all financial institutions, regardless of size and number of transactions, will need to adopt some form of digital tool to meet regulatory challenges.

As for the consulting industry, I am not advocating for a "robot consultant" but rather a consultant that understands robotics, artificial intelligence and other technologies that help to meet regulatory and business needs. In a nutshell, to remain relevant in the long run, financial organizations should gradually embrace digital transformation and study today the tools of tomorrow.

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SOURCE KPMG