“RegTech,” dubbed “the new FinTech,” has ascended from complete obscurity into prominence. RegTech is pretty much what it says on the tin (at the risk of sounding too simple). It is the use of new technology to enable the delivery of regulatory requirements. This wedding of technology and regulation is not unique. However, it is becoming more and more critical as levels of regulation rise. Attention to data and reporting is also increasing.
More companies are investing in RegTech because of a rise in new regulations. These new regulations started coming into force in 2012. They include Know Your Customer, Anti Money Laundering, and Basel III. The second Markets in Financial Instruments Directive (MiFID II) is another new regulation. Also included is the second Payment Services Directive (PSD2).
Companies are boosting their RegTech applications and systems so they can do more. They are enhancing the current tools. These upgraded tools will release considerable advances in data management and automation. These improvements are inspiring breakthroughs in asset managers’ back-office functions. They are informing more and more middle-office processes as well.
Experts agree that RegTech will help the Fundamental Review of the Trading Book (FRTB). It will assist firms in finding a smarter way to manage the challenges of the regulation. RegTech also shows potential for know your customer regulatory reporting (KYC).
The current technologies demonstrating the most promise for RegTech are:
- Data Analytics: Data analytics is the examination of vast sections of unstructured and structured data. Companies use it to detect patterns and deliver business insight.
- Artificial Intelligence & Cognitive Statements: These terms refer to the ability to capture and apply human knowledge and experience.
- Machine Learning: This is the extrapolation of business rules from the scrutiny of large sets of data.
Can AI solve Compliance Issues?
Banks are increasingly looking to AI to solve hurdles in rapidly responding to regulatory changes. AI may hold the promise to manage risk, automate reporting, and predict trends. Clients have come to SIS for strategic research on potential solutions on Compliance and Regulatory strategies.
Regulation Technology and CyberSecurity
At an increasing frequency, there have been reports of data breaches ranging from financial institutions, to retail stores, healthcare, to Sharing Economy Apps, as well as the government.
When companies are attacked, the names, email addresses, dates of birth, telephone numbers and even passwords of millions of users can be compromised.
These problems have only escalated in past years, and along with the introduction of thousands of mobile apps, has led to a global increase in regulating all industries and scrutinizing all types of businesses. RegTech Market Research can help make sense of opportunities and challenges in your business.
Budding RegTech companies face several challenges. For example, data providers are often disinclined to comply. There is also much competition from big consultancies. However, many of the RegTech companies are growing fast. They are more cost-effective, agile, and can adjust to changing market conditions. They can also push the innovation that is sweeping the sector. These attributes make it more likely that they will be able to meet these challenges.
Significant obstacles exist in adopting new solutions and technologies. The main issue is that confidentiality of data trumps regulatory reporting. Financial institutions must focus on shielding the privacy of clients’ data. They cannot adopt any compliance solution if clients’ privacy is not assured. The challenge lies in ensuring that regulations strike an appropriate balance. Regulations must protect privacy and security while promoting effective data use.
The hierarchy of regulations poses another challenge. Regulations are intricate, diverse, and multidisciplinary. Certain regulations apply only to national needs. Another challenge is the lack of standardization among regulators. This is a challenge because it tends to create uncertainty.
How Regulation Technology Research Can Help
The RegTech market is massive. It’s essential that finance industry players do market research. It will help them get more value from technology with fewer dollars spent. Market researchers can scout the industry for new technologies for clients’ regulatory infrastructures. They can see which are the best RegTech solutions for overburdened firms. These solutions should be faster, better, safer, and cheaper for all.
RegTech has the potential to deliver close to real-time insights. These insights come through artificial intelligence filters and deep learning. The technology monitors capacity. It also detects glitches beforehand. The client no longer has to take enforcement action after the fact. The potential of RegTech is considerable. However, it’s a young technology, and there are only a few documented case studies in existence that show the returns it can make for stakeholders.
RegTech will continue to build on the gains it has made so far. RegTech companies are developing new tools for regulated companies. These tools are for businesses both within and outside the financial services industry. It’s safe to say the insurance sector will get particular attention. Current financial institutions will partner with next-generation technology providers. These partnerships will support an environment of greater innovation. The innovations will lead to even more growth within the next few years.
About RegTech Research and Strategy
Against this background, you should have a plan to help your company keep abreast of proper practices and necessary actions to comply with the myriad of new laws that have been enacted or are being contemplated. If you want to be sure that your company is aware of, and prepared to deal with compliance under all current and anticipated regulations, you may want to consider a third-party to help in these efforts.
- SIS has unparalleled knowledge of global markets and the different regulations they each have that can affect your customers and the data you collect and maintain about them.
- We can help you find the right people to interview and survey in order to learn about proposed legislation and how you can use this intelligence to stay ahead of competitors.
- We have a panel or list of prequalified, willing and able respondents that have agreed to be contacted for research purposes. You can utilize them for your specific research and intelligence gathering needs.