RegTech (regulatory technology) essentially includes any technology used to ensure companies comply with their regulatory requirements. RegTech is designed to provide advanced solutions using emerging technology such as AI and machine learning.
The term was first coined by the UK’s Financial Conduct Authority (FCA) in 2015.
RegTech focuses predominantly on the financial industry and allows firms to reduce their regulatory risk and ultimately lower their overall compliance costs. For example, The Financial Conduct Authority (FCA) issued nearly £200 million in fines to UK companies for financial non-compliance.
It is also utilised by high-risk industries such as health, law and insurance.
The term RegTech is associated with similar terms for technology solutions such as FinTech (Financial Technology) and InsurTech (Insurance Technology).
Benefits of RegTech
The benefits RegTech can bring to an organisation includes:
- Efficiency – processing high levels of data quickly, analysing the information for insights simultaneously.
- Accuracy of data – implementing the right technology can reduce the gaps in compliance operation and reduces likelihood of human error.
- Streamline process – allows transparency throughout the business as everyone can use the same system and processes.
- Improved risk management – RegTech tools can help protect organisations against risks such as cyber-attacks and fraud by alerting individuals to suspicious activity.
Examples of RegTech
RegTech can be split into the following subcategories:
- Compliance – automating processes such as searching for new / changed regulations, reporting and data analysis, monitoring and tracking the state of compliance.
- Regulatory reporting – the submission of data required by regulators to evaluate an organisation’s operations and overall health, determining compliance.
- Identity management control – customer due diligence obligations concerning countering terrorist financing, money laundering, tax evasion, and fraud (termed “know your customer” KYC).
- Risk Management – detect compliance and regulatory risks, assess risk exposure and anticipate future threats.
- Transaction Monitoring – monitoring of customer transactions.
Take a look at the Deloitte website for an extensive list of RegTech companies along with the technologies and solutions they are offering.
How RegTech can help you
A RegTech solution may use several components or sub-categories that then provides a whole solution which is interlinked through to a dashboard which provides the management information (MI) that is required for the organisation.
In the risk management area Application Programming Interfaces (APIs) are often used to connect and pass data to other platforms and help with compliance MI and manage actions. Examples include APIs into a Computer-aided facility management (CAFM) where work orders and audit and inspection findings are automated, and resolvers assigned to findings or actions and measured.
The SHINE platform and associated plugins from Praxis42 provides this capability and is used in large property estates or complex organisations either ‘out of the box’ or as bespoke requirements.