Regtech Has Become a Crucial Pillar of Financial Technology
The financial sector adheres to strict regulations, including the FinTech companies changing the world of finance, but the technology handling regulatory compliance is also adapting.
Better known as RegTech, regulation technology is emerging as a means to handle the data and security that make dealing with finances so sensitive in the digital era. Organizing data through analytics with identification and authority is important for any financial entity, and FinTech companies are no exception.
By managing more and more data, FinTech companies require tools to ensure compliance with greater agility and credibility. As they evolve their own technologies, RegTech has done the same, forging an unlikely situation where various sides of the equation are working closer together.
“RegTech brings together unlikely partners — banks, regulators, and technology firms — to create solutions that will benefit the financial services industry as a whole,” says Jon Jones, president at Trulioo. “It’s only through collaboration that financial institutions can achieve reliable, cost- effective compliance while regulators can ensure that regulatory control is being managed effectively.”
This does mark a significant shift for all involved, because legacy systems have long managed compliance from a distance. RegTech can have a more immediate impact, with basic tasks that reduce operational risks in meeting compliance and reporting obligations.
It could also help FinTech reorient more resources and focus on security and risk mitigation, which is critical when identification and authority need to be protected from being compromised.
“RegTech offers an opportunity to repurpose compliance teams, offering the opportunity to automate typically mundane but burdensome tasks and allowing them instead to establish a renewed focus on risk mitigation,” he says. “The goal is to continue to remove hurdles that would hinder FinTech’s contribution to creating an enhanced, fair, and resilient financial system — from this perspective RegTech is an innovation enabler.”