Regulatory technology (RegTech) is an emerging trend in the banking industry. The global RegTech market size is predicted to grow to $85.92 billion by 2032.
The market expansion is driven by the rapid adoption of advanced technologies and the need for banking to meet increasingly complex regulatory requirements.
Regulations are becoming increasingly complex and change frequently, making it difficult for human compliance administrators to keep up with all compliance requirements.
In this blog post, we will discuss the impact of regulatory technology on banking compliance. Learn the definition of Regtech, banking compliance, and how Regtech can optimize banking compliance.
What is RegTech?
RegTech (regulatory technology) is the use of modern technology to improve how banks manage compliance. RegTech is a relatively new field but is developing rapidly.
Regtech providers leverage technologies such as artificial intelligence (AI), machine learning (ML), and natural language processing (NLP) to bring the power of digital transformation to the world of regulatory compliance.
Banking Industry Compliance Overview
Compliance comes from the word “comply,” which means to adhere to any guidelines, rules, commands, or policies.
Therefore, compliance in the banking industry means adhering to rules, laws and guidelines, both internal (the company's internal policies) and external (guidelines from authorized regulatory authorities).
The role of compliance in banking is to detect and eliminate deviations, illegal activities and inconsistencies in the activities of the company.
As usual, every banking company has a separate compliance department responsible for the following processes:
- > Information processing;
- > Security;
- > Risk management;
- > Ethical conduct and other controls
- > The reliability of the data (including in relation to money laundering).
How RegTech is impacting bank compliance
Fintech companies face ever-increasing regulatory standards, change and complexity.
Banks and financial institutions must comply with over 200 new or updated regulations every day. Faced with this looming compliance burden, Regtech has emerged to optimize almost every part of the compliance process.
Increase efficiency
Banking is a highly regulated sector, and as regulatory requirements continue to expand, compliance teams struggle to keep up without the assistance of regulatory technology.
Regtech tools can process large amounts of data, analyze raw legal documents and extract valuable information much faster than a human employee.
Reduce the level of human error
Humans can make mistakes, which is what sets them apart from robots. The implementation of regtech tools and thorough integration of technology will assist human employees, reduce gaps and potential errors, and streamline the compliance process.
Transparency in operations
Regtech tools integrate people and processes, making business processes more transparent, thereby streamlining the process of information exchange between different departments of a company and creating a strong compliance culture.
Robust risk management
Regtech tools help protect against many types of risks, including market abuse, cyber attacks, fraud, etc. Digital “employees” monitor the system, detect suspicious patterns, and alert human employees to suspicious activity.
In summary, RegTech is a relatively new but rapidly evolving field aimed at helping banking institutions comply with increasingly stringent compliance standards.
If you are looking to strengthen your compliance team through RegTech implementation, speak to the experts at S-Pro.
The company's software developers combine years of expertise in fintech development, superior technology and a customized approach to develop and integrate regtech solutions for banking.
