RegTech
RegTech is a new domain within the financial industry that applies technology to improve regulatory processes, especially with regards to KYC and AML.
A major contributor to this article appears to have a close connection with its subject. (February 2022) |
Regulatory technology, Abrv: regtech, is a new technology that uses information technology to enhance regulatory and compliance processes. Regtech expands across all industries, including: financial services, banking, technology, retail, gaming and healthcare. RegTech puts a particular emphasis on regulatory monitoring, reporting and compliance and is thus benefiting highly regulated industries. The objective of RegTech is to enhance transparency as well as consistency and to standardize regulatory processes, to deliver sound interpretations of ambiguous regulations and thus to provide higher levels of quality at lower cost.
RegTech to date has been focused on the digitization of manual reporting and compliance processes, for example in the context of Know your customer requirements. This offers significant cost savings to the financial services industry and regulators. However, a 2016 academic paper suggested that the potential of RegTech is far greater stating that "it has the potential to enable a close to real-time and proportionate regulatory regime that identifies and addresses risk while also facilitating far more efficient regulatory compliance".
The report goes on to suggest that RegTech's transformative potential will only be fully captured by a new and different regulatory framework situated at the nexus of data and digital identity. The developments in FinTech, the tremendous changes in emerging markets, and the recent pro-active stance of regulators (for instance with the development of regulatory sandboxes), may potentially combine to facilitate a transition from one regulatory model to another.
