the rise of regtech

Improving Efficiency and Reducing the Cost of Doing Business

Regulatory Technology or RegTech has become a hot topic in financial services in recent years, following in the footsteps of FinTech. As its core, RegTech involves using new technology to more effectively meet regulatory requirements, however the joining of technology and regulation to address regulatory challenges has existed for some time with varying degrees of success.

According to Deloitte, the key difference between traditional solutions and the RegTech solutions is agility, speed, integration and analytics. Traditional solutions are robust, inflexible and not easily adaptable, while RegTech offers advanced analytics, innovative assessment techniques and intelligent use of mined data through automated processes.

RegTech companies work in collaboration with financial institutions and regulatory bodies, and utilize cloud computing and big data for sharing of information.

Source: Investopedia

RegTech solutions are also cloud based, which means that data is remotely maintained, managed and backed up, offering cost-effectiveness, flexibility, scalability and security.

RegTech Facts

  • 54% of compliance executives are planning to increase investment in RegTech over next 3-5 years.
  • Global compliance spending will reach $120 billion in five years.
  • London is in the first place for RegTech digital transformation, followed by Palo Alto, New York, San Francisco and Chicago.

Sources (Crowded Media Group, Centric Digital) 

Where Does It Works?

  • Legislation / regulation gap analysis tools
  • Compliance universe tools
  • Health check tools
  • Management Information tools
  • Transaction and regulatory reporting tools
  • Activity monitoring tools
  • Risk data warehouses
  • Case management tools

(Source: Deloitte)

The Next Big Thing

According to a research done by EY, the adoption of RegTech solutions is set to grow significantly, and will contribute to increasing volumes of data around regulatory compliance, "enabling more granular reporting standards, scenario analytics and horizon scanning with the capability to generate better insights".

Experts expect that in the near future financial institutions will start increasingly to adopt RegTech solutions, just as the case was with FinTech. This can possibly to lead to a reduction in overall compliance costs through automating and simplifying business processes, writes International Banker, which should lower the need to perform manual checking, while delivering scalable solutions and allowing speed and efficiency to be achieved.