Today there is significant momentum building around Regulatory Technology. While the name is new, this marriage of technology and regulation to address regulatory challenges has existed for some time. But in the past it has met only varying degrees of success.
So since technology has been used to address regulatory requirements for some time now, what’s new and exciting about RegTech? And what difference can it make to the way modern organisations and financial markets operate?
What makes RegTech different?
What makes RegTech important today is the rapid development of new technologies that have breathed new life and vastly greater potential into the field. RegTech can in some ways be seen as an extension of FinTech and essentially represents its natural progression into new domains.
Progress in cloud computing, Big Data and machine learning are enabling financial institutions and governments to completely transform their regulatory practices. They are now looking to RegTech to meet some of their most important requirements – the “Three C’s”. These are compliance, cost, and complexity.
What RegTech provides is a proven way to boost agility. This is through enabling organisations to leverage advanced technologies to extract, load, and transfer complex data sets to create consumable and insightful information. This can now be done far more efficiently, allowing businesses to solve real world problems.
RegTech offers a myriad of time and cost saving measures that can be tailored to suit a business or government organisation’s needs. Some example of RegTech’s capabilities are:
- Using machine learning to undertake highly accurate background checks. This helps financial services organisations remotely verify the identity of any individual.
- Big Data analytics that allows for scalable real-time risk management to be performed by banks and financial institutions.
- Leveraging cloud computing services that can organise regulatory information to fully automate shareholding disclosures.
Where will RegTech go in 2019?
Because of the trajectory of the technologies that underpin it, RegTech is set to benefit from the ability to collect and process more date, even faster than before. Companies that employ it will continue to drive improved and more tailored analytics that increasingly benefit from the ongoing vast investments and advancements being made in AI.
Due to its importance in tracking and compliance, RegTech will also benefit from the ongoing moves towards better and more complete encryption of data. Where once enterprise may have only looked to encrypt what it perceived to be its most at risk or critical data, organisations are increasingly looking at blanket encryption of all internal and in transit data.
Comprehensive encryption strategies provide more robust security as well as helping to ensure regulatory compliance. This means firms can have increased confidence in and allocate less resources to complying with key regulations such as GDPR and MiFID II.