Heralded “the new FinTech” by
Deloitte, “RegTech” has rapidly risen to
prominence in 2015, from total obscurity. But what exactly is Regulatory
Technology (RegTech)? And why has it become the next big thing?
At risk of sounding too simple,
RegTech is pretty much what it says on the tin: the use of new technology to
facilitate the delivery of regulatory requirements. Or, in slightly more words,
RegTech is technology that seeks to provide “nimble, configurable, easy to
integrate, reliable, secure and cost-effective” regulatory solutions
(Deloitte).
Is RegTech the new Fintech?
In itself, this marriage of
regulation and technology is not new. But it is becoming more and more crucial
as levels of regulation rise and focus on data and reporting increases. It also
addresses a gap in a financial services market that is being disrupted at a
speedy pace by FinTech – Financial Technology. In a range of areas, dynamic
FinTech has been driving a more efficient and more effective way of doing
things. The extension of this disruption to regulatory practice is the next
logical step.
We can expect this disruption to
make regulation highly data acquisitive and to involve the use of real-time
information, and the incorporation of algorithms and analytics. London is
increasingly being seen as the home of RegTech with a range of leading global
RegTechs based in the capital.The FCA
recently engaged in its own crystal ball gazing, suggesting areas where RegTech
might be about to effect substantial change.
It envisioned “new approaches” to
“streamline AML checks” (that would enable firms to differentiate themselves)
and the use of social media and biometrics to transform how customer due
diligence is done, how anti-fraud measures work and how banks “filter the wheat
from the chaff when deciding whether to make a suspicious activity report”.
The automation of due diligence,
using data that can be tailored to a firm’s risk-based approach, is at the
forefront of this RegTech revolution.
(text from: https://complyadvantage.com/blog/what-is-regtech/)
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