Why is RegTech so important for managing compliance? That may sound like a silly question. After all, good regulatory technology makes compliance faster, simpler and more cost-effective. Sure. But there’s a more fundamental reason. When we look at the research, it becomes clear that the real driver of RegTech uptake is the cost of compliance. And those cost-effective compliance technologies are so desirable precisely because the cost of manual compliance is so high. It additionally decreases the possibility of human error, making compliance more accurate and efficient.
Solving the SOC 2 dilemma
Now when it comes to SOC 2, we need to think about the cost of compliance in a slightly more nuanced way. Because SOC 2 isn’t just another regulation that you need to accept as the price of doing business. Rather, becoming SOC 2 compliant is an effective way for SaaS companies to secure their clients’ trust and successfully compete in new markets.
And that raises a critical business decision. In many cases, SOC 2 compliance is a prerequisite to enter the US market or to do business with certain customers that demand SOC 2. But it also potentially poses a significant cost. As a business manager, you need to ask whether the higher (potentially much higher) operational costs are worth the competitive advantage.
Or at least, you would have to if you continue to rely on expensive, dreaded, manual compliance processes. However, effective SOC 2 compliance technology changes the whole calculation.
When we understand that RegTech was designed to overcome these business dilemmas, we can appreciate that technology is less about creating any specific efficiencies and more about creating an effective solution to a high level business problem.
The true cost of non-compliance – the risk you do not want to take
Let’s think about the cost of regulations in more practical terms. We know compliance is expensive. For example, research shows that US banks alone spent over $100 billion on regulatory compliance in 2016, with the cost rising year by year. Compliance is a massive operational expense, especially in highly regulated industries.
But what about the cost of non-compliance? For instance, smaller US healthcare providers report difficulty meeting the infosec and privacy requirements. They often lack the technical knowhow or resources to follow proper IT security protocols. Unfortunately, however, compliance isn’t a luxury. It’s often a necessity. In practice, providers that neglect compliance end up inadvertently committing HIPAA violations. That means risking being penalized by regulators. No less importantly, it means that providers are failing to properly secure their data, putting their systems at risk of a reputation-destroying breach.
We could point to countless instances of businesses using insecure processes to manage their data. Their excuse? Compliance is too expensive. But the fact is, the cost of non-compliance risks being far higher – in money terms and other data breach consequences .
RegTech is a business solution to a business problem
With these considerations in mind, let’s think more concretely about the potential costs and benefits of SOC 2 compliance.
We know that companies need dependable, secure technology providers. And we know that, for SaaS companies, being SOC 2 compliant provides a significant competitive advantage across most markets. But we also know that SOC 2 compliance can be extremely resource-intensive.
Fortunately, effective SOC 2 compliance software slashes the cost of compliance (both in terms of time and money) and makes SOC 2 efficient and attainable for any provider. Which, as should be clear by now, is not something we should think of as merely a technical issue just for compliance managers to worry about. Ultimately, RegTech is a high level business solution to a critical (perhaps existential) business problem.
SOC 2 automation, with a human touch
It’s no wonder, then, that more companies are adopting powerful and dynamic SOC2 automation software, such as Scytale. For any SaaS company entering competitive markets and in need of a strong Information Security system in place, Scytale’s efficient and cost-effective SOC 2 solution just makes sense.
And while technology has become crucial for managing compliance costs and targets, you still need to use that technology as effectively as possible. That’s why Scytale’s software solution is backed by an expert advisory service that ensures you unlock the full value of the technology and meet your strategic business goals.
It’s an effective way to maintain SOC 2 compliance and achieve and maintain sustainable results.