Investopedia has defined RegTech as, “a blend word of ‘regulatory technology’ that was created to address regulatory challenges in financial services through innovative technology. RegTech consists of a group of companies that use cloud computing technology through software-as-a-service (SaaS) to help businesses comply with regulations efficiently and less expensively”
Simply put, RegTech are those latest technologies that help banks and financial institutions overcome the regulatory and compliance challenges. The financial crisis of 2008 was one of the worst kinds for the market. When the market started to ramp up, authorities tightened regulatory compliances making it difficult for financial institutions to clinch deals. Fortunately, the invasion of RegTech is helping these institutions in saving their costs and time while complying to all the regulations.
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The scope of RegTech is huge and for different industries, it may act in a different definition. We say that RegTech is not just about compliance, it is more about efficiency and productivity. The companies that adopt to RegTech are able to master their compliance regulations, free their resources and focus more on the core business development.
Over the past few years, RegTech has emerged as a niche within the FinTech industry. Abiding by regulatory compliances has always been cumersome, but with RegTech, companies are able to keep their regulatory promises.
RegTech has been helping and will continue to help companies through the following ways to solve compliance and regulatory issues:
- Bring the cloud to the core of regulatory compliance
You talk about FinTech, LawTech or RegTech, cloud computing is always at the core. With the help of RegTech, you can bring cloud-based solutions to abide by regulatory compliance. Whether it is KYC and securing the data or safe financial transactions, RegTech, with the help of cloud is picking up speed and gaining a strong foothold in the compliance landscape.
- Unprecedented digital transformations of regulations
Understanding the regulatory protocols such as GDPR, FinIA and other text-based directives can be intimidating even for the seasoned professionals. RegTech helps the experts to digitalize these compliances and bring them under one umbrella. Here, RegTech is a powerful facilitator.
- Strategizing the regulatory impact of business decisions
We measure the impact of any new technology in business looking at the ROI. RegTech is becoming necessary to measure how certain regulations and compliances are going to impact the business decisions in the long run. With a simplified understanding, the authorities can take better strategic decisions.
- Reinforcing the banking compliance
Open banking system is vulnerable to money laundering and other frauds. Banks should abide by all the regulatory compliances to ensure that their customers’ data and the transactions undertaken via mobile devices are safe. Regulations such as KYC, GDPR, PDPA are easily manageable accurately and efficiently with RegTech.
- Real Time Reporting
Real time reporting is trending and real time work is appreciated across industries. RegTech helps and will further support various FIs and Banks to analyze the data in real time. Reg Tech will help firms identify the risks proactively, look for issues and opportunities that lie ahead.
- Regulating, reframing and implementing new governances
While adapting to RegTech, you can not only keep an eye on the current regulatory compliances, but can also find how it is going to be in the future. This is being discussed as this unfurls the predictive aspect of RegTech. This facility enables the companies to change their policies and processes according to the future regulation.
- Bring more tax efficiency for the business
Off late, RegTech has encroached the tax territory as well. The technology has ramped up to offer profitable and tax efficient advice. While you implement RegTech to your system, it will help you identify the tax rules and predict the investment patterns, which can prove to be a wealth management insight.
- Wide adoption by the regulators
The advanced benefits and highly secured capabilities of RegTech has made it a key tool for seasoned regulators in the market. It has emerged as an ultimate solution to facilitate compliance while maximizing operational efficiency and minimum cost outlays.
- Cross border risk management becomes easier
The international rules and regulations can be cumbersome and difficult to handle. Further, the regulator risks associated with cross border transactions have been increased in the recent years. Different industries will have different legal requirements and it would vary from country to country. RegTech will offer a unified interface to monitor cross border financial and other business activities.
- RegTech Innovation
As of now, RegTech innovations are already integrating all the regulatory change management solutions into compliance workflows. Furthermore, RegTech is doing a laudable job in connecting the regulatory measures with other management processes like organizational structures, risk and control, policies thereby streamlining the entire efforts of the compliance teams.
Every financial institution and bank can partner with RegTech consulting firms to address issues related to regulatory compliances, and develop holistic solutions to reduce the time and effort otherwise require to abide by the regulations. The day is not far when adapting to RegTech will be mandatory for firms to deliver a positive customer experience with the help of simplified compliance.