Simplifying the Complexities of Regulation with RegTech

There is an undeniable truth in that the more progress we make, the more complex regulatory policies become. The growing volume and complexity of regulations that companies must observe in today’s world has given birth to a technological solution that helps them navigate regulatory challenges with ease and maintain compliance. RegTech, short for “Regulatory Technology,” is the solution companies use to comply with regulations in today’s digital age.

This solution can make a company’s processes more efficient, effective, and less costly using a wide range of technologies such as artificial intelligence (AI), cloud computing, and natural language processing (NLP). Ultimately, it helps companies address and manage industrial challenges like cyber security, anti-money laundering, know-your-customer compliances, and more.

Complex Problems, Complex Solutions

Several factors make this technology necessary in this modern era, such as growing regulatory complexity, rising costs, increasing enforcement, and technological innovation. Hence, the industries with the heaviest regulations experience the double edge sword known as progress the most. Industries like finance, healthcare, energy, and insurance are some of those most affected.

However, RegTech, as mentioned above, encompasses various technical solutions. Below is an analysis of the core four:

• Artificial Intelligence (AI)

  • With the ability to automatically analyze vast amounts of data like news articles, social media, and regulatory filings, AI can identify potential compliance risks and anomalies that could harm a company. Additionally, AI can monitor transactions and detect potentially fraudulent activities.

• Big Data Analytics

  • By handling large volumes of unstructured and structured data from different sources, businesses could monitor transactions and identify patterns that may indicate fraud. Additionally, this solution can be used to identify further and mitigate operational risks.

• Blockchain

  • A secure and transparent method of storing and sharing compliance-related information across various parties, blockchain technology can assist with financial queries and secure sensitive data such as medical records.

• Cloud Computing

  • With the computing power and storage capacity necessary to process massive quantities of data, such as financial records, customer data, and regulatory filings, companies can meet their business needs with flexibility and scalability.

All of these technical solutions are not mutually exclusive. They can work in tandem to enhance compliance, improve the accuracy of decisions, reduce risks, and enhance the customer experience. Other technologies like natural language processing (NLP) and robotic process automation (RPA) can also be utilized to meet the following industrial challenges.

• Anti-Money Laundering (AML) & Know-Your-Customer (KYC) Compliance

  • Using RegTech solutions, financial institutions can verify the identities of their customers and monitor their transactions for potential money laundering activities. This task is completed through the automation and streamlining of said processes.

• Data Privacy & Cyber Security

  • Data breaches and cyberattacks have become more common in recent memory than in the past. This issue can be alleviated by RegTech due to its capabilities to monitor and ensure its systems are both strong and meet compliance standards.

• Environmental, Social, and Governance (ESG) Compliance

  • Company operators, specifically investors, have increasingly prioritized ESG aspects within their companies. With a relatively new-found pressure to ensure that companies are operating sustainably and responsibly, RegTech can help track and report on ESG metrics. This ability would assure compliance with regulations and meet investor demands/expectations.

• Risk Analysis

  • Whether risks for a company or risks for a customer, RegTech solutions, such as machine learning capable AI, can meet the continuously complicated regulations pronounced by governmental bodies.

• Quality Assurance

  • As more and more processes and hidden truths are brought to light, quality standards for products and services have become a focal talking point. Regulators have reasonable but difficult standards, making these solutions far more essential than in the past.

The finance, healthcare, energy, and insurance industries can benefit from the implementation of RegTech. With the help of seasoned software developers, benefits like automating compliance processes, enhancing customer due diligence, and ensuring that sensitive data is secure and private to manage risk can be possible. As a result, the four core technlologies that RegTech comprises can help companies stay ahead of complex and constantly evolving regulatory requirements.

Optimizing Regulatory Processes

Our society is set to continue to evolve and grow, both in population size and technological complexity. Therefore, we require the somewhat ironic assistance of new technology to help us guarantee the best outcomes for as many people as possible. Whether it's with elaborate solutions like artificial intelligence or blockchain, various benefits are just waiting. Regulatory Technology, or “RegTech,” can help us get there.

To combat today’s challenges that are made up of hacks, malfunctions, and pure human error, expert software specialists can work with companies across various industries like e-commerce, manufacturing, healthcare, and more in the development of custom RegTech solutions to help mitigate or eliminate them. This will improve customer satisfaction and drive businesses toward stronger security and increased revenue.