• Kirsten Saliba
  • 14 April 2022
  • 5.6 mins

The modernisation and digitisation of businesses across every sector are increasing at a faster rate than ever before in human history.

The desire to limit costs, improve service and productivity and, importantly, stay on the right side of compliance means companies are always looking to adapt and evolve their systems to keep operations running in an efficient cost-saving manner.

In these post-covid times, the predictability and stability of business can no longer be taken for granted, meaning new challenges have also emerged requiring everyone to be more agile and vigilant in their performance.

Of all the industries, banking and finance have the most critical responsibilities, but they are not the only ones. Since 2008 regulators have responded by making stricter rules and policies and making compliance a mandatory necessity within business. When companies err, they are punished, but these retrospective measures are not enough; prevention is better than cure.

A lot of financial entities are trying to combat the increased compliance burden by expanding their compliance staff, and departments, but it is becoming apparent that this is not enough to meet the challenges posed by the constantly evolving regulatory framework.

This is where RegTech comes in. RegTech is the tech-enabled transformation of compliance. The initial focus of RegTech was the automation of key processes such as anti-money laundering (AML) and KYC, to reduce costs, improve reliability and free up company capacity to focus on other areas of growth.

As part of the broader FinTech sector, RegTech allows companies to easily adapt to the increasing pressures of regulation while being cost-effective and secure.

It is also the tech that is the perfect result of combining digital transformation with compliance, making it an essential tool for the modernisation of businesses across every sector.

While this market segment has existed for several years now, it is only recently that we have seen such significant growth, indicating the segment’s increasing importance, especially in the Fintech context.

So, what is RegTech?

Broadly speaking, RegTech refers to the set of technologies and software that addresses the regulatory challenges of institutions and companies, especially those in the finance sector. It uses innovation in tech to meet regulatory requirements and keep up with emerging and changing laws.

Rapid implementation of new technologies, complex statutory requirements and the need to be updated on current regulations and ongoing directives gave shape to RegTech to meet compliance standards.

What Does RegTech Do?

RegTech uses new technologies like cloud, open data models, AI and ML to enhance the processes for meeting the ongoing requirements of compliance. It can complement current in-house compliance processes or replace them fully through these new technologies, updating and working in real-time.

The services provided include risk management protocols, risk-mitigating controls, updates in sync with global regulations, checks against regulatory alerts, KYC, AML, CTF and much much more.

It also has the benefit of being fully customisable, to fit a business’s specific needs.

Who Needs RegTech?

In a word, everybody! But here are some of the main sectors that are finding the implementation of RegTech as a vital part of their digital transformation.

  •       Banks and financial institutions
  •       Financial services – bullion, cross-border trading, jewellery, real estate, automobile, luxury goods and more
  •       E-Commerce
  •       Casino and Gaming – payment services, iGaming, land-based casino etc.
  •       The Services sector – finance law, accounting, and consulting

Why do you Need It?

Digital transformation is a big reason for adopting RegTech into your business, but digital transformation is necessary for several reasons.

As digitization increases, financial crimes intensify

Increased digitisation has led to an evolution in cybercrimes. As systems get more sophisticated so does hacking and this is a major concern as any system is only as strong as its weakest device. Fraudsters find it easy to get around typical mechanisms like passwords, OTPs and biometric data verification. Banks especially need to be one step ahead to be able to catch people before they can cause any damage.

Covid-19 has brought in a new normal

In a post-COVID world, new procedures for even basic protocols like physical verification need to be established. Companies are turning to things like video verification for KYC protocols for things like validating loans or online applications. New initiatives need an infusion of emerging RegTech to ensure they are staying compliant and minimising risk.

Technology Optimises Operations

This is especially pertinent for finance as the use of technology here has been recorded as being a lot slower in uptake than in other sectors.

Fintech has disrupted this by successfully using technology to integrate regulations with innovative contributions. These technologies, the likes of blockchain, AI, machine learning and cloud computing all make up the basis for RegTech and are being used to ensure compliance in many vital protocols, streamline processes and open up capacity for companies to focus resources on more profitable areas of business.

Regulation and Costs are Increasing

Post-2008’s financial crisis, governments across the world have been rolling out more and more regulations and the landscape is now changing faster and more frequently than ever.

This spiralling regulation raises compliance costs, especially for global and multinational companies and institutions; having to be compliant not only where they are based, but also where their customers live. Banks alone have spent over $300 billion in fines since 2009, and hundreds of regulatory revisions are being rolled out in any one country making it more difficult to stay ahead.

RegTech works in real-time, allowing companies to stay up to date with the latest requirements wherever they may be, saving time, money, and effort across the board.

Join the RegTech Revolution

No compliance framework can be fully automated but regulatory compliance must be a balanced mix of technology and human expertise.

RegTech is moving beyond just mitigating risk and strengthening regulatory compliance and moving towards optimising compliance costs as well. RegTech can transform businesses by providing business insights, improving the customer experience, driving new products, and assisting in digital transformation.

Sekuritance is a CeFi & DeFi RegTech ecosystem, providing a one-stop-shop on all compliance needs, from KYC, KYB, AML, transaction monitoring, identity management, onchain analysis and more to merchants and individuals alike.

Let us ease the burden of compliance on your business and help make digital transformation a painless process, find out how by visiting us at www.sekuritance.com.

About Sekuritance

The Sekuritance RegTech platform provides a single platform for every eGRC need, including end-to-end AML/CTF, CECL, FCPA, vendor management, beneficiary onboarding, investor check, card processing MFA checks, blockchain wallet checks, cyber-risk assessments, and other RegTech or Business Process Management requirements.

Stay tuned for more info and follow us on:

Twitter: http://twitter.com/sekuritance

Telegram: http://t.me/sekuritance

Website: https://sekuritance.com

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