5 things you should know about RegTech
Regulatory Technology (RegTech) is an emerging industry in the field of Financial Technology. RegTech helps to meet the compliance needs of companies whilst greatly reducing the time and economic costs required to complete compliance work. Here are 5 things you should know about RegTech:
1) The Growth of RegTech
The global RegTech market is expected to grow from USD 6.3 billion in 2020 to USD 16.0 billion by 2025, at a Compound Annual Growth Rate (CAGR) of 20.3% during the forecast period as stated in a report by Reportlinker. This growth can be attributed to various factors, such as increasing costs of compliance, rising need for faster transactions and regulatory sandbox approach to support RegTech innovations.
2) RegTech makes use of Deep Tech
RegTech makes use of blockchain technology along with other technologies such as cloud computing and big data. Blockchain helps to create faster and more efficient ways for businesses to receive, transmit, and track orders using secure data. RegTech companies thus make use of blockchain technology for the following cases: Anti-Money Laundering (AML), Client Onboarding, Monitoring and Record-Keeping.
3) Great Impact on the Financial Sector
Over the last few years, RegTech has brought about a great impact on the financial sector. Since the Global Financial Crisis, authorities have stepped up their regulation laws causing an increase in time and resources spent by businesses on regulatory compliance. With RegTech, businesses were able to not only ensure that regulations are complied with but were also able to save costs while enhancing the accuracy of information reporting to the regulatory authorities. Thus, vastly benefitting businesses in the financial sector.
4) RegTech Enhances Customer Experience
The adoption of RegTech can help to benefit businesses in terms of operational efficiency. As a result of this seamless adoption of automated services like client onboarding, it improves customer experience.
5) RegTech Reduces Risks
Due to advanced data analytics, it allows for regulatory information to be studied and thus reducing risks. Proactive reporting of risks and compliance leads to increased transparency and hence improved governance as well.