The term RegTech or Regulatory Technology was first used around 2014 in the UK. It was first introduced as a subgroup of FinTech, that would help develop innovative automated solutions for implementing compliance procedures. The increasing number and complexity of financial crimes across the world have made it necessary for every business to have anti money laundering compliance.
Global financial regulators have also been encouraging the development and use of RegTech. It can help businesses digitise manual compliance processes thus reducing the time required to perform them, thus decreasing levels of financial crimes like money laundering and corruption. Additionally, RegTech can also overcome any possibilities of error in the existing compliance systems.
Is RegTech the Answer?
Automation of business process is the goal of any progressive company. Although financial institutes have been reluctant when it comes to adopting new technology, they have been catching up gradually but surely. RegTech has been offering solutions that use technologies like Artificial Intelligence, machine learning and cloud computing to design faster and secure business process for banks.
Outdated tech systems already in place in banks are difficult to maintain and have higher maintenance costs. Those along with an increased compliance staff can drive the compliance costs for a company through the roof. It is high time that the financial sector executives realise that investing in outsourced RegTech solutions is their best option.
The Advantages of RegTech
Currently, the solutions available through RegTech include AML screenings through an AML scanner and KYC (Know Your Customer) services, fraud detection and prevention measures and data analytics. Some of the ways in which RegTech has made life easier for banks and other companies include;
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- Reduction in Compliance Costs: by automating the compliance process, RegTech can reduce the time it took existing systems to analyse and process the data. This can enable businesses to reduce the compliance staff, thus reducing costs. Plus, such systems also reduce the number of false positives thus saving the trouble of investigating false leads.
- Improved Efficiency: Products and services available in the Reg Tech market use AI tech to sift through large amounts of data within minutes. This eliminates the need for compliance officers to comb through every detail of each transaction and give them time to actually investigate a threat.
- Revenue Boosts: Banks and financial institutes implementing faster due diligence processes can attract more clients as they provide a smoother onboarding process. Such companies also tend to have more reliability that can increase customer satisfaction.
- Maintain Reputability: When companies adopt stricter fraud prevention and AML procedures they can maintain their good reputation in the industry with every stakeholder.
RegTech holds limitless possibilities for the future and can transform the anti money laundering procedures in a company. Some of the tools currently available in the market are just a glimpse of what the sector has to offer. Technologies like artificial intelligence and machine learning can go far beyond processing and analysing data and may someday even be able to produce actionable insights.
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