Understanding the various terms used in the financial services industry can be helpful, especially if you’re pursuing a career in this sector or working with financial professionals in your business. One term you might hear is regtech, which is short for regulatory technology. Explore the meaning of this term, and learn about regulatory compliance platform options that can support monitoring, compliance, and reporting regulations.
Regtech, also referred to as RegTech or regulatory technology, is a term that describes the management of various regulatory processes that apply to the financial industry. The processes’ key functions include regulatory compliance, reporting, and monitoring. Most regtech compliance solutions rely on machine learning technology and data tools to monitor transactions and detect potential issues. Because the financial industry also includes the digital payment sphere, regtech also aims to identify outliers in payments made online or through other digital means.
The term regtech refers to a group of companies that rely on cloud computing software tools to help them comply with all regulations in an efficient and cost-effective manner. Any business that sells goods or services operates in the financial sector, as it collects and issues payments regularly. As a result, any financial compliance requirements that apply to businesses of this type must be followed carefully to avoid costly penalties and fines.
The Importance of Regtech
In the financial services industry, it’s vital to have access to data that protects both companies and consumers. Complex and strict regulations apply to those operating in this sector, which can be challenging to keep track of when handling other business needs.
The introduction of regtech transformed the way financial services businesses operate, providing access to key data in an easy-to-use format. By utilizing an effective regulatory compliance platform, a business can protect its interests while maintaining compliance with applicable laws and regulations. Failing to comply with all required regulations can have a significant impact on a business’s success.
After the financial crash of 2008 and ensuing economic crisis, new regulations came into effect in the financial industry to protect consumers from similar issues in the future. The introduction of these new regulations occurred in conjunction with technological advancements, including disruptive technology use. Breakthroughs in financial technology increased the number financial tech (fintech) companies focused on the needs of the consumer, including the customer experience and how they engage with financial services providers.
As companies and individuals relied more on technology, many sought out regulatory compliance platform options that would support their efforts to remain in compliance with ever-changing regulations. Concerns regarding the privacy of consumer data have also led to the creation and passing of laws around data privacy, as well as its distribution and usage. Now, more than a decade after the crash, the need for compliance regtech remains.
Key Characteristics of Regtech
Several key characteristics that differentiate regtech solution providers include:
A regulatory change management tool can organize intertwined and messy data sets through transfer load and extract technologies. It can also generate reports efficiently, allowing financial professionals to review key details and make changes accordingly. Many companies rely on regulatory change management software with compliance artificial intelligence capability to integrate with other solutions and mine significant sets of data for various purposes.
RegTech operates in many financial and regulatory spheres, automating projects and tasks that previously took significant time and manual effort to complete. Examples of these tasks and projects include:
- Fraud prevention.
- Data management.
- Employee surveillance.
The companies that offer regulatory change solution options often have unique goals and aims, so it’s vital for businesses seeking artificial intelligence compliance to partner with regtech companies with shared goals. For example, if a credit card company seeks to reduce fraud, it might be best served by a regtech solution that uses machine learning to detect unique patterns in consumers’ spending habits. By identifying deviations from previous habits, companies can detect fraud sooner or even prevent it altogether.
Many regtech compliance companies exist, each with its own purpose and aims. Notable companies have provided risk management and anti-fraud services, regulatory report creation, data collection automation and storage, and data usage consent tools. But Compliance.ai is one of the best providers of regulatory change management solutions in the industry, offering software that can mitigate risk, reduce costs, and ensure compliance among those in the financial services, insurance, and banking industries.
A partnership with Compliance.ai provides your business with access to regulatory change management software that’s transforming the way companies operate in the financial sector. Customers use it to monitor regulation changes and the resulting obligations, as well as ensure all required shifts are implemented effectively and properly. Explore this financial regulatory compliance software to stay on top of an ever-changing set of laws and protect your business from the risks of noncompliance.