Table of contents
- About RegTech
- RegTech in relation with FinTech
- why RegTech matter so much?
- Why is RegTech so Popular?
- Applications of RegTech
- RefTech and its future
“There is an element of compliance that looks like a funnel.” “RegTech holds the promise “of narrowing down what human needs to look at.” -David Skanderson, Charles river associate
- About RegTech
RegTech – The regulatory expenses which were spent annually by the banking sector and some other financial institute as well have undergone a sudden increase that was to after the global financial crisis accrued in 2008. For managing the risk in a better way there are multiple regulatory bodies which are expected in institutional for reporting the massive amount of data in recent times. RegTech offers a solution that is cost-efficient also satisfying all the regulatory obligation by the process of digitization and automation. When we consider regulator then for them data serve as an effective recognizing technique that could help them grow in the market with fast speed.
For the beginning, let’s start with knowing what does RegTech means. RegTech is the short form of regulatory technology which is an application of the improving advances technology to improve the way business manage the concern related to regulatory compliance. The burden in its risk and handling strategy is ever increasing. So here the technology is used mainly we can observe the information technology in the procedure for monitoring, reporting and providing compliance to regulatory-related things particularly. The procedure of its applying is done mainly by regulated participants and the regulators.
2. RegTech in relation with FinTech
- RegTech may be often been related to FinTech which is proving solution to financial problem thus can be said as so much different in term of application been provided by both parties. But the important point which should be noted here is that both are different thus should not be confused into one.
- RegTech, however, can be termed as an effective tool such as fintech in different domain of work. RegTech mainly helps us to have a though like rethink the way regulation and finance works.
- Here the policies should always be up to date and that too based on the recent rules and regulation under practice so that the requirement can be fulfilled. So, change made in every 10 seconds even should be made without fail.
3. Why RegTech matter so much?
- The question that arises here is why RegTech matter so much? The answer yet can be understood in a brief when the global financial crisis took place on 2008 at that time regulatory and compliance requirement for the market became complex to handle and not only that the length and prescriptive also was changed totally.
- The heavy fines and penalty were compelled on noncompliance that to severely. In the united nation, these fines were reached over$200 billion which is quite a heavy amount. Not only that now the compliance annual spending by the financial institution was increased by $70 billion.
- Now the industry was in a complete dilemma and searching for techniques to overcome this extensive crisis of huge loss in front of them.
4. Why is RegTech so Popular?
- RegTech is mainly popular as through the process of digitization and automation cost efficiency was offered in this technology.
- All the regulatory obligation can be resolve through this is mainly the belief of the system. Mainly by the help of technology-related or we can technology-based systems help the financial institution to collect the data to produce the required reports with a correct format as mentioned and according to the schedule been specified by the regulatory bodies.
- By using this the regulators gain strong power and the capacity is also increased.
- All this is possible because of the effective use of data which they obtain for the rapid development to be implemented in their sector.
5. Applications of RegTech:
There are some areas for application of RegTech. Big data is one among those as due to the post-crisis regulation been passed there were huge bundles of reports and data stated to be generated. There was lack seen in practice adopted by regulators to handle the capacity and analyze the data they received but now with the of RegTech, it is easy to analyze the datasets and get important information timely so that important decisions can be made on time without any much lag. The other application which is a kind of popular is macroprudential policy. This is the greatest potential for RegTech. Due to that financial crisis, we understood the importance to do early reaction so that the steps can be taken to prevent it from happening.
6. RefTech and its future:
- One more question that could have arrived in most for our brain that is Ref Tech has a future so the answer is obvious.
- As currently it is considered as one of the best tools which are quite effective helping in improving the existing processes though automation and digitization techniques it highly considers.
- The finance sector can be transformed using this technique as RegTech has these potential that brings a transformation for sure.
- As the regulation is been revolutionize. It can be used to develop new process and come up with new techniques to implement things.
- For this, the datasets are mainly used. This can be said as a data-driven approach and a much more powerful technique that would be able to facilitate regular monitoring and then close the real insight that can recognize the problems.
- Several challenges are faced by RegTech. The startup has to deal with the problem related to I.T. and so much security approvals need to be done this securities-related stuff are related banking sector.
- Also, one more challenge is about the data been provided to them as if the data is good then the RegTech working will also be good.
RegTech has an application that will enable it to work in the future too. The main thing that matter here is how much aware we make ourselves with this technology. several parts can be confusing but the technology application is helping the sector being good support. The rules and regulation attached to these ae convenient to adopt. It’s quite trendy nowadays.