Regtech – Concept, History, Functioning, Features, Cloud Computing, Applications & more

Know everything about Regtech or Regulatory technology here. Find details like its concept, history, functions, application & more.

Lets get Started and understand how Regtech is helping financial regulations.

About Regtech or Regulatory Technology

Regtech completely lives up to its name. One can easily understand the purpose of the company by simply breaking down its name.

‘Reg’ and ‘Tech’, the company uses cloud computing and other information technology to regulate processes.

Now the question arises, ‘Which processes?’. Regtech mainly focuses on regulating financial processes by using technology. It is to eliminate any kinds of fraud, money laundering, scams, etc.

The reason why Regtech is on the financial process is that it is a subset of Fintech. Also, it is solely for the improvement and automation of financial services.

Besides, Regtech focuses more on reporting and monitoring these processes which benefits the financial sector.

Not only that, Regtech’s other objective is to provide all these services with higher quality at very reasonable prices.

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The Brief History

The financial crisis of 2008 had completely destroyed people’s trust in the financial industry.

Then obviously, plenty of regulations came into action to prevent such blunder from happening again. This led to the rise of Fintech companies.

These companies worked in order to restore people’s faith in the financial industry and to build transparent and harmonious relations between both.

Financial institutions became burdened with the merging regulations as they were costly and incommodious.

Regtech came up to help financial institutions to regulate their compliances. They can also lower the all-time high compliance costs.

Thus, it makes the process of managing the regulatory compliance more efficient and cost-effective.

Know more about Fintech & its Impact

Functioning of Regtech

The increase in digitalization has indeed resulted in making human life more convenient and easy-going.

It also puts us at a higher risk of being a victim of fraud, money laundering, or other illegal activities. This is where Regtech comes into the picture.

With the use of advanced and efficient technology like Artificial Intelligence and Machine learning, it can make a change.

Regtech has also been continuously making efforts to reduce these activities and decrease the risk of compliance.

It does so by providing information and data regarding money laundering and fraud activities that take place online.

Many companies might not be aware of these activities because of their traditional and inefficient technology. It doesn’t monitor or track such activities.

Regtech uses its advanced technology to monitor and track such activities. Transactions take place in a very specific way, to avoid any kind of fraud. It follows a particular pattern.

Regtech tracks any irregularities or changes in the pattern. It seems unusual or the changes that should not have been happening.

This prevents the company from being the victim of such scams and frauds.

Cloud Computing in RegTech

Regtech uses cloud computing to carry out these activities. It is because cloud computing is the most efficient, and cost-friendly technology that we can use to carry out these tasks.

Cloud Computing enables the sharing of confidential data within servers with utmost security. For instance, a bank receives a lot of complex data daily which can be very difficult to sort.

Regtech helps banks by sorting and segregating this data. It makes the bank aware of the risky areas regarding money laundering.

This saves the bank a lot of time and money as well. It is also because of the smart usage of technology.

Know in detail about Fintech Products & Services

Features of Regtech

Regtech can separate and organize cluttered and complex data sets through extract and transfer load technologies easily. We can also use it to generate reports very quickly with precision.

We can also use it to get solutions in an amazingly short amount of time. To sum it up, Regtech uses tools to extract big data sets and use them for varied multiple purposes.

Applications of Regtech

Regulation gap analysis tools – These tools help companies figure out loopholes or reasons that cause the incapability of implementation of the regulatory process.

Regulatory Monitoring – This process also includes identifying all the regulatory requirements. They can increase or decrease activity with regard to health, safety, energy, security.

Policy management – Policy management is the managing of existing policies in a company or implementing new required policies for the betterment of the company in every aspect.

Compliance universe tools – Compliance management tools are very useful and effective for professionally presenting a company or organization’s compliance with the management of that company.

Health check tools – The health check tools’ function is exactly what the name suggests.

These tools help check the health of the server and make sure it is not vulnerable to any frauds or scams and is safe and secure.

Identity verification – Identity verification makes sure that the person’s identity matches with them. For instance, it makes sure the identity is authentic.

This prevents fake users and identity theft and makes the processes very safe.

Management Information tools – Management information tools manage complex data which can be difficult to sort or align.

Transaction reporting tools – Transaction Reporting tools make reports of the transactions that are placed very quickly without any manual input.

These tools help report transactions on time to avoid any mishandling of sensitive data.

Regulatory Reporting tools – In simple words, Regulatory reporting tools submit formatted data or raw data.

The regulators need it to keep a track of the financial operations and other operations regarding compliance that takes place in the company.

Activity monitoring tools – Activity monitoring tools increase awareness. It allows the analysis of the business activities which we inherit from real-time data.

Few more Application of RegTech

Training tools – Training tools (also known as development tools) help trainers to train new learners.

Risk data warehouses – Risk Data Warehousing is the storing of a large amount of data electronically. It is very reliable, safe, secure and can be retrieved anytime without much hassle.

Case management tools – Case management tools allow companies and organizations to store a tremendous amount of client data and synthesize it into a single database.

Horizon Scanning – Horizon scanning is useful for detecting early signs of potential risks or any other sort of development.

Transaction monitoring – This feature basically includes a complete picture of all the customer activity including transaction monitoring, customer information, etc.

Product Requirement Governance – Product requirement management includes analyzing and prioritizing the product requirements to prevent surplus or inadequate supply of products.

Product legal Information management – Every product has legal information and policies that have to be considered. Management of this information is also very crucial for every institution or organization.

Staff Survey tools – Staff Survey tools are used to get feedback from the employees for the betterment of the workspace. This also improves employee engagement and boosts morale.

Compliance registers – Compliance Registers are necessary to keep a track of all the legal obligations. It can record all rules the organization is compliant with.

Regtech Companies

Like Regtech is a subset of Fintech, Regtech also has a lot of subsets.

IdentityMind Global: It tracks payment activities to prevent frauds and scams and also provide safe and secure digital transactions.

Trunomi: It is also very important to have the customer’s consent about the storing of their data. Besides, Trunomi is exactly made for this purpose. It manages the consent to use customer information.

Suade: Suade is exclusively made for banks to sort their complex data and information and saves them time and money.

PassFort: It also makes the process of automation and collection of customer data very simple and efficient.

Fund Recs: It also tracks how the fund industry manages and processes the data.

Conclusion – Regtech

Regtech is evolving to become more and more efficient in terms of not just financial processes but a lot more. We can see it in aspects of company businesses.

Regtech helps to create a place where it’s very convenient for businesses and organizations to unlock more opportunities. They can also improve revenue with an added benefit of consumer security.

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