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RegTech: The Technology that regulates Technology
RegTech: The Technology that regulates Technology

December 5, 2022

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“If you think compliance is expensive, try non-compliance”

                                                                                      -        Paul McNulty

 

  

The Financial sector has been bearing a heavy load with regulations for a long time. Intending to reduce this load and a huge burden on financial institutions, they are beginning to turn to new technology solutions.

 

Regulatory technology aka RegTech is the application that helps companies to refine the way businesses manage their regulatory compliance. It helps businesses with real-time reporting, simplifies data management, faster data collection, and analytics, and saves time to meet an organization's regulatory compliance and obligations. With the rise in digital products, there has been a rise in data breaches, cyber-attacks, money laundering, fraudulent activities, etc. It becomes quite a difficult task to manage all these activities and to adjust to a large amount of new regulatory changes as it imposes high complexity as well as limited timelines. The cost of regulating industries like financial services, healthcare, etc can be diverted to some other use if the companies are tsking help from RegTech companies for their regulatory compliance. Industries where the obligations are more, need highly skilled and knowledgeable human resources and are mostly dependent on them. 

 

But what exactly RegTech does and why companies are buying this application? It helps in reporting data, processing data, organizing the data, navigating existing regulations, implementing compliance programs, implementing new regulations, etc. that further automate tasks that are repetitive like monetary transactions, detecting fraudulent activities, and reporting them to the organizations simplifying operations, etc. Technologies and tools that RegTech companies mostly use are Artificial intelligence, cloud computing, Machine learning, Data analytics, Data transfer protocols, deep learning, image recognition, Virtual reality, and Augmented reality. The compliance work involves a high possibility of making mistakes and is time-consuming. Around 49% of the buyers of this technology are using the software for navigating and implementing regulations and compliance. It indicates that this work is more challenging, time-consuming, and needs highly skilled human resources. Due to many such reasons companies in the banking and financial sector tend to outsource such tasks. RegTech has high growth potential in the Indian market as the technology is changing fast and with the fast-changing tech support high chances of mishappening in the tech space for which Regtech becomes important and can be a good area of starting a business if you can understand the operations of this technology.

  


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