What Everybody Ought to Know About RegTech

Deepak Amirtha Raj
Aug 8, 2017 · 3 min read

This article is also published on CenzaSource

Customers, Financial Institutions (FIs) have seen the explosion of FinTech in the last several years. In fact, Financial Institutions are expected to invest more than $118.70 billion on technologies by 2020. RegTech is one of the most recent technologies disrupting the risk and compliance space.

The Financial Conduct Authority (FCA) describes RegTech as the “adoption of new technologies to facilitate the delivery of regulatory requirements.” Despite the fact that technology has been used to address regulatory requirements, RegTech innovations have enhanced the adoption and utilisation of technology for better and faster outcomes in the financial sector.

Some of the salient capabilities of RegTech solutions include:

  1. Readiness: Unstructured and complex data sets can be organised through ETL (Extract, Transfer Load) technologies
  2. Integration: Offers short time frames to implement the solution
  3. Speed: Reports can be easily configured and generated quickly
  4. Analytics: Use of analytic tools to intelligently mine existing unstructured data sets and unlock their fullest potential

There are a wide variety of technologies being used in RegTech solutions development which include Big Data, Data Visualization and Blockchain. Other applicable technologies, according to Bloomberg BNA, include Biometrics Verification, Machine Learning, Robotics and Artificial Intelligence for processing large, unstructured data such as e-mails, Facebook posts and the use of application programming interfaces (APIs).

These technologies are used for aggregating big data, modelling risk for bank stress-testing, monitoring of capital-requirement compliance, updating compliance manuals, improving anti-money laundering and Know-Your-Customer (KYC) programmes and preventing fraud.

BBVA Research noted that some RegTech solutions use Data Mining and Analytics tools which incorporate Computational Statistics, Complexity and Statistical Physics Algorithms (also known as Deep Learning) to enhance the performance of their solutions. Visualisation tools assist in the understanding and reporting of multiple heterogeneous data sources while not requiring programming skills.

Besides the above technologies and techniques, there is real-time and system embedded Compliance/Risk evaluation tools to enhance operational efficiency and effectiveness. Soon, we will see agile software integration tools that will allow those off-the-shelf accounting and compliance tools to interact directly with regulatory reporting systems. Predictive coding, as well as open platforms and networks that are used for data sharing and format standards also play an integral part in the Regtech ecosystem.

What are the long term benefits of Regtech?

  1. The customer experience will become enhanced — thanks to the development of a robust fraud platform that will keep their financial information secure.
  2. The financial health of institutions is protected by adopting these advanced technologies.
  3. There will be improved compliance due to transparency and proactive reporting of risks and compliance.

Lets Connect:

Twitter : @Deepakamirthraj

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Deepak Amirtha Raj

Written by

Marketing Strategist & Business Development at KYC-Chain and Selfkey

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