Technology for Regulations and Compliance

Summary

RegTech addresses regulatory challenges and facilitates the delivery of compliance requirements, which include both new and existing rules, regulations, sanctions and industry specific guidance as prescribed by the respective regulatory body. This chapter looks at three key areas: the evolution of RegTech (Journey from RegTech 1.0 to 3.0), phases of RegTech tools, and future of RegTech. RegTech 1.0 was mostly driven by large financial institutions who integrated technology into their internal processes to combat rising compliance costs and complexity as epitomized in the Basel II capital accord. While RegTech 1.0 to 2.0 focused on cost gains and efficiency, 3.0 is shifting focus towards reconceptualizing the financial and regulatory landscape, for example, by shifting the focus from a KYC to a KYD (know your data) mindset. The RegTech 3.0 has four phases of development: manual, workflow automation, continuous monitoring, and predictive analytics.