• Avril Brenda Chan

What RegTech can Offer

Regulatory Technology is an emerging industry in the field of Financial Technology. Financial Technology refers to the use of advanced technology and data analysis techniques in the financial service industry to improve the operation and customer management capabilities of financial institutions. Regulatory technology, on the other hand, helps to meet the compliance needs of companies by automatically collecting information required by regulatory agencies and automatically submitting the relevant reports.

Within the next five years, the cost of compliance for companies is expected to rise to $280 billion. Regulatory Technology can help financial institutions integrate data sets within the company and unify operating methods, thereby greatly reducing the time and economic costs required to complete compliance work. In order to meet the various regulatory requirements, Regulatory Technology services have made great progress in the following five areas:

1) Digital Supervision Report

Digital Supervision Report includes automatic aggregation, storage and analysis of data, and the generation of exclusive reports for third parties. For global financial institutions, adjusting existing reports and technologies to adapt to the changing supervisory requirements can be expensive and time-consuming. Thus, by making use of regulatory reporting technology, reporting costs can be expected to be reduced by 30%. Specialized regulatory technology solutions can also automate the process and reduce the cost and time required to generate various reports.

2) Regulatory Compliance

Financial institutions have to follow current laws and regulations daily. This field is the main battlefield for compliant software vendors. Regulatory compliance tasks involve procedures, policies, documents, audits, security controls, and technical implementation. As most compliance work is repetitive, it creates the appropriate conditions for automation. In turn, the utilisation of automation can reduce compliance costs and greatly improve work efficiency.

Furthermore, Artificial Intelligence (AI) technology can make compliance a qualitative leap. The biggest advantage of deploying AI tools is that it can help handle unstructured data. Since most automated compliance software can only identify completely compliant behaviours, some non-compliant behaviours will be ignored. However, with AI, it can help to find the anomalies in unstructured data, which is highly crucial.

3) Identity Control

Identity Control is an important key to maintaining compliance. Identity control work mainly involves customer registration, identity verification, and continuous verification related to Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations. Since most of these operations are currently performed manually, customer due diligence takes a long time, causing the process to be not as ideal.

The mainstream technology used in the field of identity management and control is AI, and AI-based regulatory technology software can help retrieve unstructured data and improve customer information. In addition, big data is essential for connecting big data sets. Biometrics technology also enables customer identity verification and personal risk analysis.

4) Transaction Monitoring

Financial Institutions are expected to attach greater importance to Transaction Monitoring. According to the United Nations estimates, the amount of money being laundered accounts for 2% to 5% of the world’s total GDP each year, that is, between US$1.6 trillion and US$4 trillion. The tools that regulatory technology provides uses technologies similar to those in the field of identity management and control, including artificial intelligence and blockchain. These tools can help to identify potentially malicious or non-compliant transactions. In the long run, blockchain applications can protect transaction monitoring as every transaction will be recorded, making data review more convenient. Due to the use of blockchain smart contracts, certain fraudulent behaviours can even be stopped by the system locking software built-in by the regulator before it occurs.

5) Risk Management

Regulatory technology companies that focus on Risk Management can accurately find process flaws in financial institutions and identify potential regulatory loopholes. The solutions they provide are designed to track, time stamp, and call specific data points in a timely manner, which is essential for companies that want to stifle risks at the source.

More than half of the solutions in the field of risk management on the market rely on big data. Big data analysis can be used to predict changes and detect risks. A typical risk management solution can provide data governance, monitoring and protection functions. In the field of regulatory technology, the number of companies that can provide risk management solutions is the largest.

We see how RegTech is gaining prevalence in the FinTech industry as well as its importance with respect to compliance. At RegTank Technology, we aim to be a one-stop compliance solution for fintech businesses, navigating compliance, security and risk management challenges in the most effective manner.

One-stop compliance solutions for fintechs, navigating compliance, security and risk management challenges in the most effective manner

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