Our second blog in our ‘What is…’ series focuses on diving into what RegTech actually is. RegTech, a shortening of Regulatory Technology, is commonly used to describe the set of technologies utilized to address regulatory challenges.
Typically, RegTech provides the tools needed to facilitate governance, mitigate risk, ensure compliance and deliver regulatory reporting.
RegTech leverages new-age technologies that conjure a variety of dynamic watchwords – responsive, agile, available and accurate, to name just a few.
Commonly, RegTech solutions will share the same foundational framework: they will often be cloud-based in order to achieve optimum speed, cost and flexibility; they will utilise machine learning, AI and natural language processing; they allow for real-time monitoring of regulatory change and impact assessment; and will employ data visualisation, semantic analysis and deep learning.
RegTech allows for creative, innovative solutions that may once only have been dreamed of. It binds compliance processes with clever automation, creating interconnections and efficiencies that de-risk the business, increase revenues and cut costs.
The three big wins from RegTech – when delivered in a smart, fast, and cost-efficient manner – are:
- Risk mitigation– RegTech can mitigate risk by ensuring that the right policies and tools are put in place, that they are applied in accordance with regulatory obligations, that all actions and decisions are recorded in an indisputable audit trail, and that any breaches are identified quickly and remedied immediately. In doing so, financial institutions can significantly reduce the risk of data loss, fraud, enforcement penalties and fines. Digital business can be conducted with heightened confidence in the ability to detect risk quickly and act appropriately.
- Cost reduction– RegTech generates vast cost savings through intelligent automation and leaner processes, enabling redeployment of staff to more pro-active work, and greatly reducing the need for outsourced services.
- Business value– delivered through fast, intelligent processing, throughout the onboarding process for example, or by reducing time to market for firms needing to understand the regulatory implications of launching new products or entering new markets. RegTech also has the capacity to provide deep, intelligent insights that empower financial institutions to make smarter, more informed decisions.