RegTech is the marriage of regulatory work with technology in order to help with the delivery of regulations and is seen as a subset of FinTech. It has arisen after concerns following the financial crisis of 2008 resulting in businesses wanting to reduce the risk of this happening again. This involved introducing regulations to increase both risk controls and maintaining capital as well as ensuring that the financial sector was more transparent. This resulted in the industry needing to ensure that they were complying with the new rules by adapting where necessary. Technology was advancing at a rapid rate in this area and this together with the need for regulatory change resulted in the arrival of RegTech. The use of technology is not new in this industry, but it was becoming more vital as the levels or regulations increases and data and reporting requirements becoming more widespread and robust. In the same way as Fintech, RegTech allows the regulation industry to rapidly update solutions by using suitable software and other relevant technology. It allows companies to use cloud computing technology in order to comply with regulations in a more efficient and cost-effective way. London is being seen as the base of RegTech with several market leaders based there. Our expert solicitors can guide you on all aspects or RegTech and can assist our clients in solving issues, including those that are very complex, all the way from conception of an idea to implementation.
Why is RegTech beneficial?
The use of technology will have various impacts on the regulatory industry including the speed of getting work done and integrating solutions into a business. It will also help with analytics and perhaps most importantly with agility within the industry, for example, in relation to how data sets are handled. Regulatory compliance is a major issue for businesses and is both time-consuming and expensive. The requirements in relation to gathering information has increased massively and this again has had an impact on businesses. The use of RegTech will assist businesses to save both time and money in their compliance of regulatory issues as well as assisting them to report more accurately any information that they need to provide to the relevant supervisory bodies. This is turn will benefit these authorities who will receive more accurate information that will be available nearly in real time to allow them to monitor any risks a lot more effectively. As well as this, customers will benefit from RegTech since it will improve fraud control in relation to payment methods as well as customer identity management, both of which are major issues at the moment. The use of RegTech will ensure a more transparent and controlled regulatory system which will reduce the risk of deficiencies in this area.
Technology has resulted in an increase in criminal or fraudulent activities including money laundering, cyber hacking and data breaches. RegTech companies are able to monitor online transactions in real time to highlight suspicious activity and can pass this information on to companies for their money laundering investigations. The use of social media and biometrics could also be used to change the way that customer due diligence is performed, as well as making the process fully automated.
Although the traditional methods are designed to deal with your specific requirements, they can be fairly inflexible in new situations or where there needs to be a change. This is where technology is able to revolutionise this industry. Regulatory issues can change fairly quickly and businesses need to be able to adapt to this. The use of technology allows companies to quickly and seamlessly respond to these changes. An area where this may be particularly useful is for British businesses in light of Brexit where there is likely to be vast regulatory changes.
The use of cloud-based technology in RegTech also has several advantages that a business can benefit from. It is extremely flexible and companies can customise how they control, access or share their data. It is easy to add on, change or remove additional features as a business’s needs change. It is also cost-efficient since a business will only pay for what is it actually using. Finally, and possible most importantly, the data is held securely since it is data encrypted.
How does RegTech work?
This depends on the regulatory areas that they are being used for. The relevant RegTech will depend on the area of work that is required for that business, be this compliance data management, fraud prevention, anti-money laundering compliance, employee surveillance or fraud prevention. Each solution is then tailored to this particular issue to ensure that is covers what is required.
All RegTech has to be cloud-based in order to ensure that it is both flexible and also responsive to the needs of the market. But so long as this requirement is met, there is then a huge range of technology that could then be used to alter how information is captured, managed and analysed and so be regarded as RegTech. This includes the use of artificial intelligence, biometrics-based identity management, big data, blockchain technology and data visualisation techniques.
Contact Selachii - RegTech Lawyers, London
RegTech it appears is here to stay and should have a bright future. It gives businesses a huge opportunity for regulatory issues to be automated and managed so that there is control and clarity. Obviously though, a lot of the concepts are very new and can be complicated. This is a fast-evolving area and the different types of technology may be something you have not come across before. Gaining expert legal advice on all aspects of RegTech can ensure you understand the impact on your business and your role in this area.
At Selachii, we understand that while it is fundamentally important for existing RegTech businesses and customers of those businesses are aware of the regulations that affect them, it is especially important that new RegTech companies are aware of which regulations apply so they can remain compliant. We can also advise on how the various RegTech options can be used to enhance and further your business needs. Contact our expert lawyers if you need help or advice on the issues surrounding RegTech on 0203 553 0100 or using our online form.
