Definition of Regulatory Technologies

Defining Regtech

Regulatory Technology (RegTech) is a technology that allows firms to easily adapt to the pressure of increasing regulatory reporting while being cost-effective and secure. This technology allows companies to automate the process of monitoring data. Regtech is the new fintech that simplifies the process of regulatory requirements.

In itself, a combination of regulation and technology is not new. These are the tech products primarily created for financial institutions to comply with various regulations. At the same time, these technologies help the regulators in the efficient implementation and monitoring of regulations.

Though used as substitutes, Regtech and Suptech are different terms.

The emphasis of regulators on data and reporting has given birth to a new breed of technology company termed Suptech. Though similar to risk management companies, suptech companies are unique as they are using new technologies such as artificial intelligence and machine learning to make the supervising process easy.

Regtech development also addresses a gap in the financial services industry that is being disrupted at a speedy pace by Fintech companies. Regtech platform is expected to solve the problems of complex regulatory reporting procedures. All the reporting can be done in real-time by using big data analytics.

Regtech Landscape

Primarily, there are three types of companies classified as Regtech Technologies.

1. Regulatory Compliance: They learn about the impact of changes in regulations and the business logic of banks.
2. Risk Management: These companies try to identify high-risk conduct to prevent scandals like the LIBOR scandal.
3. Financial Crimes: These companies help in monitoring high-risk transactions and identifying the ultimate beneficiary behind a shell company.

Fintech Variants

Regtech fills the current gap in the financial sector by bringing technology to address regulatory challenges since many firms’ current regulatory practices constitute legacy and manual processes that are no longer feasible to address the growing list of regulatory obligations.

• This has created an opportunity for the companies to brand themselves as Banktech companies.
• The fintech companies which carved their niche in the Insurance space are known as Insurtech companies.
• Moreover, there are other niche areas under fintech such as Accountingtech, Forextech, and Islamic Bankingtech.

Artificial Intelligence

Additionally, with the growing number of incidences of money laundering and fraud touching new highs, regulators are closely monitoring the entire industry. Regtech investment is growing rapidly. And in turn, reporting standards and transparency have become more important than ever before for firms to ensure their compliance.

For firms with business and product lines across multiple jurisdictions studying and keeping updated with the changing regulations creates additional complexities which cannot be resolved without AI Regtech.

Financial Institutions are especially under the magnifying glass concerning their regulatory compliance and should have a plan in place to digitize these processes to avoid noncompliance repercussions.

Top 20 Selected Companies

Startups are using “new approaches” to check money laundering transactions using social media and biometrics to transform the customer due diligence process. Regtechtimes is one of the leading regtech firms providing news on the subject of regulations, compliance, and technology. It aims to create its own regtech 100 list of influencers. But currently, the list of top 20 selected companies is published in the expert speaks section.