06 Oct Make regulatory compliance easier with RegTech
As you know, the financial industry is evolving fast and regulatory compliance is an increasingly important issue. Several changes and adjustments are foreseen for advisors, brokerage firms, and banks.
With all these changes and new requirements, you are probably wondering how to keep up. If you have never heard of RegTech (“regulatory technologies”), this is the right article for you, since you will definitely be hearing about this in the future.
RegTech: What is it?
Similar to FinTech, RegTech are technology-based solutions. They are designed to help firms grow, improve their performance, address compliance risks and constraints, manage customer relationships and more. These solutions are cloud-based and can include big data, blockchain, viewing data, artificial intelligence, etc.
Why are they important?
In addition to helping their users to easily handle regulatory requirements, RegTech help reduce the fees associated with regulatory compliance. In response to the increasing demands of the industry, advisors and banks need to collect and process a growing amount of data to ensure compliance. RegTech provide them with these outsourced data processing capabilities through state-of-the-art technology solutions. As a result, data is processed automatically, enabling complex reports to be generated in the blink of an eye, allowing for a rapid and flexible response to regulatory changes.
Why should you learn about them?
RegTech is not only about generating reports, but also very relevant for KYC (know your customer), pre- and post-transaction compliance and anti-money laundering (AML). Through innovative solutions, customer identification (KYC) can be simplified by automating data verification, greatly reducing margins of error and processing times, as well as facilitating account openings that tend to become complex. Anomalies and suspicious individuals are also more easily detectable and in a more cost-effective manner. Limiting the risk of severe sanctions and the resources and efforts used in the process, are the great benefits for RegTech users.
For pre- and post-transaction compliance, RegTech help ensure that expected or completed transactions meet specific criteria and are consistent with internal and government requirements. Compliance teams can then certify that transactions meet all the criteria defined beforehand.
RegTech is undoubtedly a practical and powerful tool for compliance teams, given the significant increase in compliance claims within the financial industry. Moreover, customer experience can only benefit, for as compliance demands become more stringent, more tedious verification and an increasing amount of information will be required. Regtech help ease this process while remaining alert to potential risks.