RegTech solutions are information systems that help companies comply with regulations, reduce costs and risks related to compliance processes, and improve the management of their regulatory obligations.
In 2021, the RegTech market skyrocketed with investments of nearly $19 billion globally. This is an overwhelming 244% surge compared to 2020’s already impressive figure of $7.8 billion in only a year.
The future seems bright for RegTech, but many still wonder what it does. Read on to learn why RegTech is so important, what it does, and the potential benefits it can bring to modern businesses.
Regulatory Technology Defined
Regulatory Technology (RegTech) is the latest in technological advances to help businesses and organisations comply with their existing legal and regulatory obligations. These solutions are designed to simplify staying up-to-date with regulations by automating tedious manual processes, providing analytics, and delivering comprehensive risk management.
RegTech incorporates various technologies, such as artificial intelligence (AI), machine learning, and big data analytics, to automate manual processes and identify risks. It works by collecting data from multiple sources and performing analysis to detect any irregularities in financial activities or customer/client relationships.
RegTech also helps businesses meet regulatory requirements by providing tailored reports, automated processes for compliance monitoring, and data-driven insights into customer behaviours.
How RegTech Is Implemented
RegTech is implemented in various ways and can play an essential role in helping businesses comply with regulations. It can automate manual processes, provide data insights, identify risk factors, and meet regulatory requirements.
For instance, AI-powered RegTech solutions can help detect potential fraud or money laundering activities by analysing customer behaviour data. They can also provide custom reports to help companies meet regulatory compliance requirements, reduce costs and automate cumbersome manual processes.
Additionally, they offer real-time analytics on customer activity, enabling businesses to stay up-to-date with their regulatory obligations through predictive analytics and data-driven insights.
The Benefits of RegTech
Regulatory Technology is often considered the next big thing after FinTech (Financial Technology). It is quickly becoming an essential tool for businesses to stay compliant, reduce costs and improve the management of their regulatory obligations.
In addition to providing automated processes and data insights, RegTech has several key benefits that make it a must-have for any modern business:
- Streamlined compliance processes: RegTech provides efficient ways to automate and streamline processes, enabling businesses to identify non-compliance issues quickly.
- Reduced costs: RegTech also helps reduce compliance-related costs by automating manual processes and providing real-time analytics on customer activity.
- Improved risk management: RegTech helps organisations quickly detect potential risks by providing data insights and predictive analytics. This allows businesses to take appropriate measures to address any risks immediately.
- Enhanced customer experience: RegTech enables businesses to stay in line with their regulatory obligations, leading to improved customer experiences and trust.
- Efficient Integration: RegTech can easily integrate existing systems for seamless operation. This ensures businesses can invest in something other than additional IT infrastructure and training when implementing RegTech solutions and shortens the times required before going live.
History of RegTech
RegTech is not a new concept. It has been around in one form or another since the early 2000s when organisations began to become aware of their need for IT solutions to help them comply with various regulations and laws.
The 2008 financial calamity sparked a heightened demand for regulation in the finance sector and an influx of technological disruption. With technological advances, fintech companies have developed revolutionary products designed to improve customer experiences and interactions with financial institutions. RegTech is one of the recent developments from the fintech revolution.
The deregulation of the US economy due to initiatives such as Dodd-Frank’s unwinding has contributed to a decrease in financial investments for RegTech companies. Nonetheless, the need for compliance must still be met, and automation is integral in achieving this goal. This enables further innovation within this sector despite the deregulatory environment.
Leveraging the Power of RegTech
RegTech has become an essential resource for businesses to stay compliant, reduce costs and improve the management of their regulatory obligations. Modern companies and businesses must leverage innovative technologies like RegTech to keep on top of their compliance requirements and reduce the complexity of regulatory processes.
RegTech is a rapidly evolving industry and will continue to be an essential resource for businesses in the future.
FinregE leverages the power of cutting-edge technologies, such as artificial intelligence and machine learning, combined with Cloud capabilities to create simple and cost-efficient automated regulatory compliance solutions.
Call us today to book a free demo and discuss how RegTech can help your business stay compliant and reduce costs.