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What is RegTechnology? A Guide must have for 2020

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RegTech is a mix of regulatory and technical terms. It is a modern sphere that provides businesses with a range of regulatory services in financial, healthcare, insurance, and other areas.

Thanks to the advent of some advanced technologies that have enabled RegTech to become possible. Organizations have had to manually enforce compliance with RegTech for better functioning of services.

Today, RegTech companies provide services and technology solutions to resolve problems such as regulatory monitoring, data analysis, risk management, identity control, and compliance with regulations.

The popularity of RegTechnology

Increasingly more companies rely on RegTech solutions since 2018. They use advanced regulatory technologies to manage data analysis, risk management, reporting, compliance with regulations and fraud detection.

  • Technologies that use RegTech

Modern technologies such as cloud computing, machine learning, biometrics, big data, and the blockchain have used RegTech. Let's look at how RegTech businesses use these technologies.

  • Big data

Using advanced analytics and cloud computing, RegTech companies detect hidden sequences, new trends, unauthorized users, and suspicious activities based on large datasets. Because of the big data implementation in RegTech companies, it has become much easier to control all the data in a single storage.

  • Machine learning

Machine learning (ML) plays an important role within the RegTech domain. RegTech companies use ML to examine intricate patterns for detecting anomalies across different datasets. Machine learning also helps detect fraud and strengthens risk management

ML systems can also review tax reports and alert businesses about tax issues (helping companies to comply with the law and escape fines), help companies do business abroad, and provide accurate country position complexity (CLC) rankings based on the latest data. Many ML algorithms may even reveal parts of the business environment an organization needs to improve.

  • Biometrics

RegTech uses biometric data to improve processes for identity management. Biometrics main objective is to control all entities and track suspicious activities. Fingerprint scanning, iris scanning, face scanning, and voice recognition are the most common biometric approaches. Those methods of identification are more convenient and secure than passwords.

On social media channels such as Facebook, Instagram, and Twitter, biometric technologies even enable RegTech companies to bring in new potential customers.

  • Blockchain

Blockchains have many applications in the RegTech sector. RegTech companies, for example, use blockchains to automate the collection of documents and information. Blockchains allow RegTech companies to validate records immediately, enhance the security of digital signatures and guarantee data security due to the distributed nature of the blockchain.

  • Cloud computing

RegTech companies use cloud computing to provide their products using a distribution model based on software as a service (SaaS). These SaaS solutions help businesses abide by the regulations. Cloud computing reduces hardware and software costs, making data storage more cost-effective for RegTech companies. RegTech companies can use cutting-edge technologies to comply with cloud computing.

RegTech companies can use cloud computing technologies to find any data in just a matter of seconds. All information is kept in a cloud providing data backup and recovery of disasters in case of cyber attacks or human error.

Regulatory technologies ' main characteristics

  • Enhanced analytics

RegTech firms rely heavily on their solutions ' ability to gather, process, and analyze large data sets and even real-time data flows. They use sophisticated analytics tools to send relevant data to customers.

  • High speed

Big data and cognitive analytics enable RegTech solutions to process information in real-time and to produce reports.

  • Agility

RegTech companies make use of the collect, turn, load method to quickly and effectively organize databases.

  • Easy integrity

The software as a service distribution model allows RegTech companies to easily integrate solutions with the organizations ' software systems with which they collaborate.

Services offered by RegTech

  • Regulatory reporting

RegTech helps companies to minimize dramatically the time required to produce reports using standardized and streamlined processes. Such processes do not require human intervention and do away with all human error possibilities.

If clear regulatory details are right, creditors, depositors, and bankers will be able to assess the banks ' financial condition more quickly.

  • Identity control and management

RegTech companies use Know Your Customer (KYC) systems as well as machine learning, artificial intelligence, and biometric technology to identify consumers and possible fraud. The main objective of identity and access management is to ensure that access to specific data or systems is available only to approved users. RegTech offers solutions to handle identity easily and with high security.

  • Monitoring of transactions

The data monitoring is another service offered by RegTech companies. Payment fraud has affected 82 percent of companies in 2018. Efficient tracking of transactions is a potent tool for minimizing fraud and avoiding scams. Big banks are looking into this area because they want the process to be efficient and effective at the end of the day."

  • Compliance

Regulatory compliance has always been one of the key objectives of RegtTech firms.  RegTech businesses use technology such as automation of robotic systems, machine learning, processing of natural language, biometrics, blockchain, artificial intelligence, and predictive data. They use it to deter money laundering, rising cyber threats, enhance regulatory reporting, and study credit lending apps.

  • Risk management

Provide customized services with easy-to-adopt risk identification service models; track real-time to identify potential identity theft and money laundering; analyze suspicious transactions using machine learning and robotic process automation; collect data from various sources; regulate structured and unstructured data.

Final verdict

RegTech companies provide tools and software that not only reduce enforcement costs but also make this process more effective and efficient. In this post, we have clarified RegTech's main features, services offered by RegTech firms, and innovations focused on RegTech.

About the Author

Software developer and solution provider with over 7 years of experience, including general management of mid to large size organizations, corporate development, product development, business operations, and strategies. Currently managers at EPixelSoft- A Software Development Company- A one-stop-sho...   View more...