Regtech: How Technology is Simplifying Regulatory Compliance

The growth of information technology has led to major industries around the world seeking out digital solutions for streamlining their operations. Keeping up the pace, fintech has also adapted to digital tools, bringing forth new products and services that lean towards accessibility and user convenience.

In recent years, RegTech has emerged as one of the commonly used tools implemented by fintech organisations to support regulatory compliance, in addition to monitoring audit trails and preventing fraudulent activities across platforms. If you are pursuing a blockchain course, this article is a quick guide to RegTech and its potential in the fintech industry.

What is RegTech?

Regulatory Technology, or RegTech as it is commonly known, has been steadily growing popular as an automated, technology-driven digital tool allowing organisations to keep up with their regulatory compliance commitments. In the era of digital solutions and technologies, RegTech has been noted for its immense potential in the financial industry, where RegTech can be implemented to monitor a company’s regulatory compliance and monitoring. 

In addition to streamlining the process of regulatory compliance, RegTech can reduce expenses, and eliminate the risks of fraudulent activities such as cyber hacks and data breaches. RegTech can simultaneously monitor and keep up with changes in various aspects of the regulatory space, including data analysis and management, employee surveillance, tracking transactions, detection of fraudulent activities, and more.

What makes RegTech relevant in the fintech industry?

RegTech has been recognised for the promises it brings in support of regulatory compliance, with integration, analytics and speed being its principal assets. With the ability to seamlessly process and organize data sets, as well as generate quick reports, RegTech is an incredible addition to the rapidly evolving environment of regulatory compliance. 

RegTech has also drawn attention in terms of adaptability and can be integrated into systems, even with limited resources. Mentioned below are some of the capabilities that make RegTech adaptable to conditions with limited resources:

• Compliance monitoring

RegTech tools serve the primary function of monitoring regulatory compliance, which includes tracking any changes in regulatory compliance procedures and standards. RegTech tools can identify various parameters and jurisdictions imposed on regulatory compliance and use the information to flag potential breaches, making sure that the organisation is able to keep up with all regulatory compliance requirements.  

• Regulatory monitoring

Dedicated analytics tools make RegTech an efficient digital solution, and offer automated regulatory reporting tasks, which significantly lowers expenses and saves time. Furthermore, RegTech makes use of limited resources to efficiently process data sets and organize them accordingly. RegTech’s audit capacities make it easier for companies to stay up-to-date with regulatory compliance and change management. 

• Risk assessment

RegTech compares transaction patterns based on past scenarios, such as user activity and purchases to authenticate new transactions. This can be extremely helpful in terms of risk assessment, and issues automated warnings to concerned parties, predicting fraudulent activities. Since RegTech can adhere to company protocols and predetermined rules, it has found application as a potential risk management tool that can automatically prevent suspicious activities.

• Identity verification 

RegTech tools can be integrated with KYC/KYB procedures, allowing organisations to verify the legitimacy of their customers, significantly lowering the risks of fraudulent accounts and transactions. KYC protocols allow RegTech to compare customer information, as well as secure onboard users.  

• Fraud detection and anti-money laundering

RegTech supports expansive detection and monitoring tools that allow users to collect and analyse data. The collected data can be compared to analyse suspicious activities across platforms, eliminate fraudulent submissions, and handle precautionary measures. RegTech tools also help companies to keep government agencies informed about suspicious users and activities.

• Tracking and monitoring

Incorporating RegTech can allow organisations to actively track transactions in real-time through transaction monitoring software. Other than flagging potentially suspicious activities, RegTech also accounts for eliminating ACH Network fraud and account takeover frauds, preventing any financial or data breach.

How does RegTech simplify regulatory compliance?

Managing regulatory compliance can be challenging, considering the domain of fintech undergoes changes on an everyday basis. Keeping up with compliance measures can also prove time-consuming and expensive, requiring additional resources to avoid fraud. Since RegTech tools are intuitive, they can help companies avoid additional expenses and save time. Although users are advised to learn financial technology for the best application of RegTech tools, they can also be easily operated without extensive knowledge of cloud computing. 

Incorporating RegTech has also made the domain of fintech more accessible and streamlined for its users. Given below are some of the ways in which RegTech can simplify regulatory compliance for fintech companies:

• Improved regulatory screening and monitoring

As discussed previously, RegTech has been very influential when it comes to regulatory screening. However, in addition to collecting and analysing data sets, RegTech is also able to recommend strategic use of all available data. RegTech can accurately analyse expanding regulations to predict upcoming changes and help industries prepare accordingly. 

In addition to staying compliant with regulatory changes, this can also help industries avoid additional expenditures. Furthermore, using RegTech tools can help monitor workflow, ensuring they are up to regulatory standards. Improved regulatory screening and monitoring using RegTech tools also help companies implement proactive measures on time. 

• Keeping up with regulatory standards

The ever-expanding nature of compliance standards often makes it difficult for companies to stay ahead of regulatory changes. RegTech tools can be extremely helpful in this regard, as they can seamlessly collect and process data, allowing companies to act quickly without having to resort to guesswork. And since RegTech tools make predictions taking into account factors like jurisdictions and market conditions, they can help streamline the process, saving time and money.

• User-friendly automation 

While the efficiency that RegTech tools bring in terms of time and resources is enough reason for RegTech’s steady popularity, its automated compliance reporting feature is undoubtedly a game-changer. Automated updates on regulatory changes can help industries easily meet compliance standards, keep track of transactions, and collaborate with relevant agencies.

Conclusion

The wide scope of RegTech has been praised across various financial institutions and platforms, making it a staple for financial accounting and management. If you wish to pursue a career in fintech, signing up for the Professional Certificate Course from Imarticus is the best step forward. In addition to relevant courses like the blockchain course and cloud computing, Imarticus offers comprehensive coaching to help you learn financial technology and its application. Visit Imarticus Learning today to begin your journey in fintech.