Exploring Technologies & Solutions in the Financial Services Space : -

Over the past few years, financial institutions (FIs) have partnered with FinTechs on various aspects of the business.

As we traverse through 2024, the financial market space is experiencing transformative shifts driven by technology. Within this dynamic landscape, three major aspects stand out:

• Customer Facing Areas
• Back-end Operational Activities
• Regulatory Compliance

As i am exploring the advancements in the banking and financial services sectors, it’s essential to recognize the various technologies and solutions that are driving innovation and efficiency. Among these, RegTech, FinTech, and SupTech stand out as transformative forces. Despite their similar-sounding names, each of these technologies serves distinct purposes and brings unique benefits to the industry.

Why It Matters?

Understanding the differences between these technologies is crucial for navigating their respective contributions to the industry.

While RegTech focuses on internal compliance,

FinTech is centered around customer-facing innovations, and

SupTech supports regulatory oversight.

By recognizing these distinctions, we can better appreciate how each technology addresses specific needs within the financial sector and drives progress across various domains.

Let’s delve into how RegTech is poised to revolutionize these areas and what the future holds.        

What is Regtech in Banking?

RegTech is often misunderstood and confused with FinTech. While FinTech refers to the use of technologies and software to provide financial services, RegTech is the use of new technologies to address the increasingly dense data landscape required to meet regulatory compliance challenges.

Regulatory technology, more commonly referred to as regtech, encompasses the combined usage of technologies that help companies working in the finance industry ensure that they are able to adhere to government regulations and legislation.

Need for RegTechs

Over the past decade, regulators have asked financial institutions to undertake several modernizations on their businesses and many of the organizations have struggled with regulatory-driven transformations.

Here are the Key Benefits:

• Real-Time Compliance Monitoring
• Regulation Change Management
• Enhanced Audit Trails
• Identifying the frauds
• Adapting to new regulations faster
• Improve data collection and data analytics

RegTech capabilities and solutions

• Cyber/enterprise information security
• Vendor risk management
• Anti-money laundering/know your customer
• Business continuity/ resilience
• Reconciliations and controls
• Reporting and data analytics
• IT operations
• Information and asset management
• Regulatory inventory, policies and standards management
• Compliance/SOX
• Enterprise/operational/ IT risk management

Live use cases of RegTech for FIs

• To verify identities in accordance with regulatory requirements (such as KYC) while cutting out manual processes and flagging checks for review by exception only.
• To solve the problems caused by multiple data sources, systems and errors arising from manual review.
• To give permission to banks to release account information to the AISP, which can be analysed as part of credit scoring and lending decision making.

Financial institution partner with RegTech

FIs can partner with RegTech providers or with regulatory consulting firms to develop holistic solutions and address issues related to disparate compliance teams. Any RegTech that can add intelligence to data and reduce manual effort is a prime target for use within financial institutions.

For example, online identity verification solutions can provide access to a wide array of trusted and independent data sources, such as government records, utilities and credit files.

In conclusion, the future of RegTech is bright, with ongoing advancements poised to transform how financial institutions handle regulatory compliance. By embracing these innovations, institutions can navigate the complex regulatory landscape more efficiently while enhancing customer experience and optimizing operational activities.

Stay tuned for more insights as we continue to explore the evolving world of RegTech!

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