What Is RegTech?
RegTech is the use of technology to solve regulatory problems. It aims to standardise regulatory processes, automate compliance process and create unambiguous interpretations of regulations. It is much broader than FinTech, which is aimed solely at the Financial Services sector and is focussed on disruption and making business’s more, competitive and cutting edge in technology. In contrast RegTech has been used in a range of sectors from Lifesciences & Pharma, Oil and Gas and Online Gaming to Financial Services.
What Is Driving The Demand For RegTech Solutions?
In the middle of the 4th industrial revolution the biggest regulatory challenges are uncertainty, whether that is geopolitical, government changes, new regulations, old regulations being redrafted, cybersecurity or financial.
These uncertainties make it difficult for business’s to solve and pre-empt problems. At the same time the cost of compliance has risen substantially over the last decade and is still on the rise.
This creates an opportunity for RegTech and companies providing technology-based solutions to regulatory challenges. However legacy systems and legacy thinking of leadership can be a barrier to implementing RegTech.
Every industry will be changed by the digitaliation of the 4th industrial revolution, which will produce Financial, Economical, Political and Ethical questions that will require checks and balances to be put in place. These can be helped, streamlined and made more efficient by RegTech and by having companies embed RegTech at their core, ensuring there are protections for the consumer and for the consumers privacy.
Where is RegTech adding value?
The regulatory landscape is very dynamic, making it difficult for people to keep up to speed with the latest changes. Increasing requirements for Know Your Customer (KYC) means traditional ways of manually working with documents to authenticate and screen client identifies is longer efficient or sustainable. With regulation comes reporting, but manual processes lead to errors. The volume of transactions in the digital age is increasing rapidly. Therefore traditional processes of monitoring financial transactions are no longer able to manage these volumes.
The need for RegTech solutions that add value by streamlining processes, automating workflows, tracking and monitoring and predicting problems is clear. RegTech companies are providing a range of solutions to address these challenges. These include Reglatory Reporting, Identity Management, Risk Management, Transaction Monitoring and Compliance solutions. The principal technologies supporting RegTech solutions are Blockchain, Smart Contracts, Cloud, API’s, Machine Learning, Big Data and Data Mining.