Due to increasing need to utilize new technologies in business, many new solutions are offered to help. In this connection, RegTech, as a sub-industry of Fintech, is reaching billions of dollars of funding and it will continue to evolve and grow as businesses and financial institutions work hard to stay compliant with the new and existing regulations. The growth of this new industry is due to many reasons including, among other things, noticeable volume of regulatory requirements, big fines in case of non-compliance increasing costs of compliance, clear activity in the use of technology especially after COVID-19, increased funding for RegTech companies… etc. This new technology offers safer, faster and more efficient workflows and therefore institutions are expected to increase spending on RegTech solutions.
No doubt, the increased digitalization particularly in the banking and financial services sector has given rise to a number of challenges, both to regulators and related executors in the market. There has been a remarkable increase in the services provided, however, at the same time there is also remarkable increase in new crimes, cyber-crimes, including data breaches, cyber hacks, risk of money laundering, and fraud. By using technology, the RegTech companies have started proving that they can do a better job than normal legacy systems particularly with reference to the detection of illegal illicit activities. As we see, at present, RegTech companies operate in various areas of the financial and regulatory space. The solutions offered by such companies, are helping in automating a big number of processes, including employee surveillance, compliance data management, fraud prevention and anti-money laundering.
In the financial sector, regulators across the globe have come up with a number of mandates to increase transparency and reduce risk. The sheer volume of new norms for compliance added, increased or complicated the troubles facing the financial institutions. It has been noticed that, highly regulated industries such as the banking and financial services industry are now facing ever-increasing regulatory compliance obligations. Modern new technologies, such as artificial intelligence (AI), biometrics and machine learning, can be utilized by the banking and financial industries to address challenges for regulatory compliance. RegTech companies are using these technologies in their solutions to make regulatory compliance processes more efficient and effective. Many studies revealed that, the potential benefits of RegTech solutions, in particular to financial institutions include, agility, speed, integration and analytics. Such benefits, from business perspective give great value to the new solutions offered by RegTech companies.
The RegTech solutions have various applications such as financial crime detection and prevention, cybercrime detection, tracking and recording compliance activities, centralization and timely submission of regulatory filings and streamlining market review workflows. They can help compliance departments achieve a greater return on investment by increasing operational efficiencies, reducing operational costs and mitigating the risk of breach of regulatory norms. However, the role of human beings in such areas shall not be disregarded nor minimized. We need to upgrade the standards of all professionals working in this area to go-in-line with the new solutions and to control whenever need arises. New technologies shall not totally replace human beings mindful skills & professionalism rather they should add-value. This is needed, so as to minimize occurrence or negative effects of any legal repercussions in this vivid activity. Human mind and machine abilities shall work in harmony to achieve best end-results.