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How Regulatory Technology Impacts Banking Compliance

Regulatory technologies (RegTech) are an emerging trend in the banking sector. The global regtech market size is projected to grow to $85,92 billion to 2032.

The market expansion is driven by the rapid adoption of advanced technologies and the need of banking business to address increasingly complex regulatory requirements.

Since regulations become more complex, and change frequently, human compliance managers find it hard to address all the compliance requirements.

In this blog post, we’re shedding light on the impact of regulatory technology on banking compliance. You will learn the definition of regtech, compliance in banking, and how regtech optimizes compliance for banking.

What is Regtech

RegTech (Regulatory Technology) – is the use of the latest technology to improve the way banks manage compliance. Even though Regtech is a relatively young field, it’s rapidly developing.

Regtech providers utilize artificial intelligence (AI), machine learning (ML), natural language processing (NLP), and other technologies to bring the power of digital transformation to the world of regulatory compliance.

Overview of Compliance in the Banking Sector

Compliance derives from the word comply meaning to meet any guidelines, rules, commands or policies.

Thus, compliance in the banking sector means adherence to rules, laws, and guidelines – both internal (internal policies of a company) and external (guidelines from authorized regulators).

The role of compliance in banking lies in the detection and elimination of any deviations, illegal actions, and inconsistencies in the company’s activities.

As usual, there’s a separate compliance department in any banking company responsible for the following processes:

  • > information processing;
  • > security;
  • > risk management;
  • > ethical conduct and other controls;
  • > data reliability (including related to money laundering).

The Impact of Regulatory Technology (RegTech) on Banking Compliance

Fintech companies face an increasing number of regulatory norms, increasing number of changes and complexities than ever before.

Banking and financial institutions must comply with over 200 new or updated regulations every working day. In the face of this looming compliance burden, Regtech emerged to optimize almost every part of the compliance process.

Boosted Efficiency

Banking is a highly redulated sector and the regulation requirements continue to grow making compliance team struggle to keep up without the help of regulation technology.

Regtech tools are able to process large volumes of data much faster than human employees, analyze raw legal text, and extract valuable information.

Reduce the Human Error Levels

Humans can make mistakes and that what sets them apart from robots. Implementation of regtech tools and a thorough integration of the technology aids human employees, reduces the likelihood of gaps and errors leading to streamlined compliance process.

Operational Transparency

Regtech tools ensure greater transparency in business processes uniting people and processes. This results in a streamlined process of information exchange between different company departments that leads to a robust compliance culture.

Robust Risk Management

Regtech tools help to protect against various types of risks, including market abuse, cyberattacks, and fraud. Digital “employees” monitor systems, detect suspicious patterns, and alert human employees to suspicious activity.

To sum up, regtech is a relatively young but rapidly developing sector aimed to help banking institutions comply with ever-increasing compliance norms.

If you’re looking to reinforce your compliance team with implementation of regtech, look no further than S-Pro experts.

Their software developers combine years of expertise in fintech development, tech excellence, and tailored approach to develop and integrate regtech solutions to your banking business.

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