Article
By L Guru Raghavendran, Senior Vice President, BFS Product
2 Mins
16.09.2021
RegTech companies are transforming the compliance landscape by providing latest technologies such as Cloud Computing, Artificial Intelligence, Machine Learning, Big Data and Automation to help financial institutions manage regulatory risks in an effective manner.
Key statistics: Why advanced technologies are imperative for compliance
While the above are representative numbers, they have paved the way for ‘RegTech’ to address the complexity, drudgery and risks within the lifecycle of regulatory processes, such as monitoring, compliance and reporting, with emerging technologies and automation.
Key areas where RegTech operates:
From a regulator’s point of view there are new challenges that need to be addressed in the digital era, such as agility, technical know-how, black-box algorithms, maintaining arbitrage and managing massive amounts of data. The vital issue here is that the challenges are juxtaposed against their strategic goals which continue to remain the same, namely, maintaining stability, enabling competition, and protecting consumers, while ensuring a level playing field.
Each country faces this quandary and addresses the same with regulatory updates. For example, to understand the importance of RegTech for the Indian market, The Securities and Exchange Board of India regulatory institution, set up a committee. Towards the end of 2019, the Personal Data Protection Bill, 2019, was introduced in the Lok Sabha by the Minister of Electronics and Information Technology. The bill is still being examined by a Joint Parliamentary Committee and could see a phase-wise implementation.
With the focus now on enhancing AML regimes to become more effective, reform proposals are underway across the globe. The European Union (EU) is expected to publish an AML Regulation in 2021, a departure from the use of AML Directives. In the USA, reforms are happening in the form of the AML Act of 2020, which is making its way through the legislative process.
With regulators focusing on increased effectiveness, the traditional rules-based approach to KYC compliance is changing to an outcomes-based process. As a result, the adoption of technology solutions by Financial Institutions will no doubt play a crucial role in taking preventive measures against financial crimes.
Globally, governments and regulators are gearing up to adopt the following:
These aspects also act as an indicator of the kind of solutions that will be provided and enhanced by RegTech companies for Financial Institutions.
RegTech is maturing and will grow at a faster pace in the next two years with COVID-19 accelerating the pace of change. In line with this, RegTech companies need to continuously evolve their product roadmap. They will have to play a key role in balancing the regulatory compliance requirements for Financial Institutions by providing market-driven technology solutions.
In this article published in The Wealth Mosaic, L Guru Raghavendran, Senior Vice President, Banking and Capital Markets at Azentio Software, looks at the best ways to mitigate risk from transaction laundering.
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Regional Sales Director at Azentio, Abhijeet Singh Hazare, reveals how advisers can yield maximum results by unlocking the power of AI and alternate data.
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