RegTech stands for “regulation technology”, defined as solutions that help companies address challenges posed by regulation and compliance. The term was coined by the Financial Conduct Authority after the 2008 financial crisis resulted in higher regulatory standards imposed on the finance sector.
Although RegTech originated in the finance industry, it offers solutions for almost every sector for which compliance with regulation is mandatory.
Why is RegTech important?
We live in a world increasingly dominated by government regulation. Between 2008 and 2016, developed markets experienced a 500% increase in regulatory changes, and this trend is likely to continue.
The EU’s General Data Protection Regulation is one example of this. As technology continues to dominate our daily lives, new regulations rightfully call for higher standards and greater accountability around issues like cybersecurity, data privacy and customer protection.
It is now more crucial than ever that business owners and legal professionals ensure their companies are compliant with regulatory requirements, but the myriad of new and existing regulation can be hard to navigate. RegTech offers solutions to this challenge that are easy to integrate, reliable, secure, fast and cost-effective.
RegTech isn’t something that companies can afford to ignore. Around 85% of finance professionals predict demand for RegTech solutions will grow until at least 2020 as the new wave of regulation shows no sign of stopping. Companies need to adopt RegTech solutions if they want to stay ahead of the curve.
How RegTech can benefit your business
RegTech is transforming the way businesses operate by offering effective and efficient solutions that replace outdated and ineffectual processes.
Many business owners think compliance is a drain on their time and resources. With technologies like cloud computing, automation, big data and blockchain, RegTech can help companies meet compliance and regulatory outcomes in a way that saves time and money.
RegTech solutions offer businesses many benefits, which can be summed up into four main areas:
- Compliance: By performing functions such as anticipating potential issues and detecting non-compliant conduct, RegTech can help companies mitigate risks and fill compliance gaps in their business processes. It can also offer seamless and accurate compliance reporting while allowing businesses to detect risks before regulators do.
- Efficiency: RegTech simplifies and streamlines regulatory compliance processes by performing mundane and repetitive tasks in a more timely, accurate and cost-effective way. This in turn means that capital and human power can be directed towards more productive projects such as interpreting data, rather than collecting it, to give valuable business insights.
- Customer Retention: Increased red tape around regulation can damage customer retention especially in relation to KYC (Know Your Customer) processes. Client concerns over privacy and security can also negatively impact upon customer relations. By offering solutions that provide a faster, more effective service and improve customer protection RegTech helps enhance customer experience and in turn consumer confidence in a business’ services.
- Increased Revenue: Using RegTech to keep compliance processes in check frees up capital and resources and ensures customers are happy, which can all help reduce costs and increase revenue. Experts claim that businesses who implement RegTech could see a 634% return on investment within three years.
RegTech: taking the next step
In a world dominated by ever-increasing regulation, companies that want to stay compliant and competitive cannot afford to ignore RegTech. But while they offer business owners and legal professionals many benefits, implementing RegTech solutions requires careful planning and strategic thinking.
Here at CBSIT we offer comprehensive IT security services that allow businesses to protect their data, monitor risks and make sure they comply with regulations. Get in touch to find out how our RegTech solutions can benefit your business today.