The coming together of regulation and technology is by no means a new concept. However, it is becoming increasingly valuable. As regulation becomes more widespread, complex organizations and individuals need to find efficient ways to comply. RegTech helps businesses to be organized with their compliance, keep current records and meet regulations efficiently. This is done by organizing data quickly and effectively, making it easy for organizations to maintain transparent records.
Regualtion Technology can be said to be the coming together of three main elements-regulation, people and data. This congregation enables firms to establish a culture of compliance. Technology brings these three factors together in a way to empower and enlighten both the institutions as well as their respective regulators.
The main objectives of RegTech include enhancing transparency and consistency and to standardize regulatory processes as well as to deliver concrete interpretations of ambiguous regulations. It aims to primarily provide higher levels of quality at relatively lower cost. It increases the speed with which reports can be developed, therefore, reducing the time required for compliance processes to be implemented.
RegTech differs from other methods by being cloud-based, meaning that organizations pay exclusively for what they use. Data-driven technologies are put to use along with algorithms and rule-based engines that do all the heavy lifting which was so far done by compliance and risk officers very manually in spreadsheets and legacy system.
The collaboration of existing data sets has been made simpler with the advent of RegTech. We lived in a world of complex interconnected regulations where datasets have to be reused between different regulations. Sometimes, outputs of one set of regulations may feed another. There is, therefore, an unprecedented level of granularity and transparency required which cannot be expected from manual methods. Hence, using spreadsheets and other manual methods of doing all of this is neither suitable nor viable any longer.
Since its characteristics include scalability and flexibility, organizations have the freedom to build their own system and customize it according to their needs. Being cloud-based, it provides security by encrypting the data in use and offers unlimited storage of data. This technology works best when any data needs to be reviewed- it helps in identifying risks and at the same time fulfils the compliance requirements.
Regtech is indeed winning the race to combat regulatory compliance exposure and mitigate conduct risk-especially in digital business environments. Factors which stress its need include-
- 50,00+ regulatory and compliance updates in 2015,
- Rising personal liability and increased cost of compliance
- Regulatory updates being doubled over the last 3 years
The digital age has made work easier for a lot of us. Even in compliance sectors, with RegTech, compliance officers can now do their jobs better and in a collaborative way. The advent of RegTech has successfully put all our compliance hurdles out-of-the-way and with further advancement, human effort will be reduced exponentially.