RegTech and SupTech are two terms used to describe the application of technology to support regulatory compliance and oversight of financial activities. The goal of these new technologies is to simplify processes through the implementation of controls. This is increasingly important in a market like fintech, where data shows that the number of global regulations has grown by 500% in the last decade.
But what exactly are these technologies and what are the benefits they can bring? Let’s take a look together by understanding what is RegTech and SupTech.
What is Regtech
With Regtech (Regulatory Technology), we mean the technologies that companies can use to comply with regulations in the field of finance and compliance. Regtech solutions include different technologies that are useful to companies in managing regulatory risks and proving compliance to regulatory authorities. Some of these technologies include:
- Data analysis software;
- Monitoring systems;
- Reporting platforms.
What is SupTech
With SupTech (Supervisory Technology), we mean “the use by financial authorities of advanced data collection and analysis tools, enabled by innovative technologies” (Banca d’Italia).
The new challenges posed by FinTech
Driving the need for increasingly innovative solutions like RegTech and SupTech are the digital transformation and the new challenges posed by FinTech, which require an increase in regulation. Traditional techniques are no longer sufficient to ensure high efficiency due to the large amount of information received from controlled subjects.
For this reason, Machine Learning and AI are fundamental technologies for managing all aspects of regulation and useful for reducing the work that has been done manually until now. These solutions, among other things, allow for a more functional use of working time, allowing employees to be used in other types of activities.
A digitized compliance
The need for a digitized compliance that evolves in RegTech is due to some key factors such as:
- Regulatory complexity, as rules continue to grow in the last decade;
- Costs related to compliance activities that can be reduced by avoiding the use of specific personnel;
- Avoidable penalties due to the guarantee of compliance given by these solutions;
- Improved efficiency through the automation of some compliance processes;
- Greater traceability of activities and the ability to carry out controls;
- Greater security by protecting sensitive data from external threats;
- Greater flexibility to have easily updatable solutions compared to continuously changing regulations.
In order to meet all these goals and improve their management efficiency in the field of compliance, customer care and interaction with investigative bodies, RegTech and SupTech are the tailored solutions for companies that can offer a multitude of benefits.
RegTech and SupTech: the benefits
The use of solutions such as RegTech and SupTech results in several benefits, including:
- Better regulatory compliance;
- Continuous monitoring;
- Automation of processes;
- Data analysis;
- Cost reduction;
- Improved transparency.
Essentially, the benefits that solutions such as RegTech and SupTech offer to companies consist of helping them comply with regulations in force and avoiding the penalties provided for. To do this, continuous monitoring is used to resolve problems promptly and through the automation of business processes, human error is eliminated, improving operational efficiency.
Another benefit of using these solutions is the ability to identify trends through data analysis so that more informed decisions can be made, supported by data. All these elements ultimately result in two major priority benefits, namely a reduction in costs due to the possibility of not having personnel employed for these operations and improved transparency, allowing companies to achieve their ultimate goal of being able to demonstrate to regulatory authorities their compliance.
Regtech solutions: who uses them?
RegTech solutions are useful, for example, for:
- Retail banking services;
- Commercial banks;
- Digital banks;
- Asset management institutions.
In fact, all of this type of clientele finds in RegTech solutions an excellent help in supporting their need to comply with the regulations in place.
In a market where digital innovation, efficiency and competitiveness are now key words and where rules proliferate, RegTech becomes a mandatory choice to meet the amount of rules in place and to ensure compliance.
According to the “Global RegTech Markets Report 2021: Analysis & Forecasts, 2015-2030”, the global RegTech market is expected to reach 55 billion dollars by 2025. A trend therefore on the rise for a solution that is becoming increasingly necessary. However, an important aspect related to the use of RegTech solutions is to rely on suitable entities that, thanks to technologies and the skills of qualified professionals, can be a reliable partner to find support.
At Revelis, we have developed Moneying, a solution with various features including analyzing financial transactions for AML and Risk Management purposes by applying Machine Learning and Reasoning techniques as well as pattern recognition and profiling techniques to identify fraudulent or illegal behavior, and enable the evaluation of the customer’s risk profile (KYC).
Do you want more information about Moneying or need advice on this topic? Contact us by writing to email@example.com, one of our consultants will contact you shortly.