The term financial technology (Fintech) points to new technology that aims to improve and automate the delivery and usage of financial services. Fintech, at its heart, is used to assist corporations, company owners, and consumers in better managing their financial operations, procedures, and lives through the use of specialized software and algorithms that are practiced on computers and, more, smartphones.
In general, the word “financial technology” refers to any advancement in how people do business, from the introduction of digital currency to double-entry accounting. However, financial technology has grown rapidly since the internet and mobile internet/smartphone revolutions, and fintech, which originally belonged to computer technology applied to the back office of banks or trading firms, now belongs to a wide range of technological approaches into personal and commercial finance.
Fintech today refers to a wide range of financial activities that can be performed without the assistance of a person, such as money transfers, check depositing with your smartphone, bypassing a bank office to apply for a loan, saving funds for a business beginning, or managing your investments.
What Is RegTech?
RegTech, or regulatory technology, is a technology system that assists a bank, credit union, or other financial institution in managing regulatory compliance. Financial institutions are frequently overwhelmed by the sheer volume of laws, rules, and regulations they must implement, enforce, and monitor, from business continuity and vendor management to fair financing and security. RegTech aids in the streamlining of the compliance process.
RegTech solutions come in a variety of shapes and sizes. Business solutions can be developed to provide a real-time 360-degree view of compliance and risk, whereas single-rule solutions are focused on a single area.
Compliance officers understand that regulation is not a black and white issue. Financial regulatory bodies allow institutions to design risk and compliance management strategies that are appropriate for their size and complexity. There is no such thing as a one-size-fits-all solution. The finest RegTech solutions combine automated, cloud-based technologies with the expertise and services of regulatory specialists with years of experience analyzing regulatory complexity. Robust RegTech solutions look at the whole picture, recognizing and analyzing the interplay of many types of risk throughout the entire company to improve efficiency. They also enable an institution to comprehend regulatory difficulties better, allowing it to direct resources to the most crucial areas rather than employing a scattershot strategy.
What Is SupTech?
Supervisory technology, often known as SupTech for regulators, refers to technological solutions that assist financial supervisory authorities in managing regulatory compliance. Supervisory agencies are in charge of managing risk in the financial sector as well as implementing regulations.
Just as financial companies are responsible for adhering to thousands of rules and regulations, supervisory agencies are tasked with ensuring that all of those rules and regulations are adhered to by financial institutions. SupTech provides technological tools to regulatory authorities in order to improve efficiency through automation.
RegTech Is The Regulatory Spinoff of Fintech
RegTech assists banks in meeting regulatory standards, same as FinTech assists banks in connecting with customers through technology. RegTech employs a variety of technologies, including machine learning and artificial intelligence, to build enterprise-wide data governance and reporting. These new technologies are intended to replace the current manual analysis and reporting methods.
With the ever-changing regulatory environment, RegTech improves institutions’ capacity to comply with important rules such as the Bank Secrecy Act (BSA), including know-your-customer (KYC) and suspicious activity reporting (SAR). RegTech also makes it easier to comply with data-reporting requirements under a variety of laws.
RegTech, like FinTech, helps institutions manage their inner credit and marketing standards, while FinTech helps them adhere to the government’s regulatory standards issued by several agencies, including The Federal Reserve Bank.
How RegTech Can Assist Your Organization in Achieving Compliance:
Client onboarding time is cut in half, and possible dangers from money launderers and terrorist groups are identified. The digitization of the KYC process has resulted in more consistent adherence to laws, as the process is less laborious and time-consuming.
RegTech applications may result in lower fines and legal expenses. Furthermore, with fewer compliance infractions, financial institutions lower the possibility of reputational harm connected with data or cybersecurity breaches caused by insufficient compliance monitoring.
RegTech allows financial firms to monitor regulatory developments in real-time, allowing them to adapt to new regulations more quickly. As a result, changes to internal rules can be deployed enterprise-wide in a fraction of the time it takes to do it manually.
RegTech strategies can help to improve data analytics. Through data analytics, institutions may develop a more detailed picture of their client’s financial history, both internally and externally.
RegTech reduces regulatory reporting timelines. Just as technological applications improve the efficiency and speed with which new clients are onboarded, they also improve the efficiency with which suspicious activity is reported to authorities. Financial threats and crimes are recognized and reported more quickly because of the usage of cutting-edge technology. RegTech assists in the monitoring of suspicious activities and fraud, such as money laundering and terrorist funding, once detected. As a result, RegTech assists financial institutions in early detection.
September 2021, published on Sanction Scanner